States may face a revenue fall, but if they implement reforms, Rs 1.77 lakh crore may be available.
The Department of Economic Research of the State Bank of India (SBI) has warned that the revenue of the states may decline in the financial year 2022. The department released the report in this regard on July 9. However, the report also says that if states follow the recommendations of the 15th Finance Commission, and make necessary reforms in the power sector and local bodies, they can deal with the potential revenue shortfall.
According to SBI Ecowrap, “States may face a revenue decline of Rs 1.05 lakh crore as compared to the budget estimates for FY 2022. But if they implement the reforms then Rs 1.77 lakh crore may be available to them.”
According to Ecowrap, the GST collection in 2021-22 is estimated at Rs 7.59 lakh crore while the budget estimate is Rs 7.98 lakh crore. This shows a shortfall of Rs 40,000 crore. Apart from this, there may be a reduction of 53 thousand to 65 thousand crores in the oil excise of the states in 2021-22.
In May 2020, under the Atmanirbhar Bharat package, the central government allowed states to borrow 0.5 per cent of their GSDP from the RBI, so that they could meet the power sector reforms. But last year only 13 states implemented the reforms. The Center has once again made a similar offer, under which the states can take an additional loan of Rs 1.1 lakh crore from the RBI.
The 15th Finance Commission had recommended to increase the ratio of grant amount from 11.97 per cent to 19.65 per cent of the total transfer, which the Center accepted. But for this, he has also imposed some conditions on the states. One of the major conditions is that the states will have to make the provisional and audited accounts of their local bodies public online. Under power sector reforms, states have been asked to install 250 million smart meters, 10,000 feeders and 4 lakh km of low-tension power transmission lines.
