Revenue is down by 44% compared to last year; govt. has cut expenses by 21%

The different phases of the lockdown and unlock has taken a toll on the Delhi government’s tax revenue collection. According to data accessed by The Hindu, the total tax revenue collection has gone down by 57.2% than the expected collection for the April-June period as per the annual budget 2020-21. Moreover, the collection this year is down by 44.3% compared to last year for the same period.

The collection from five streams — VAT, GST, Excise Tax, stamps and registration, and motor vehicle tax — was expected to be ₹14,700 crore. But the amount the government received was only ₹6,282.32. Also, the amount is 44.3% less compared to the same period last year, when the total tax revenue collection was ₹11,284.47 crore.

But the monthly tax revenue collection from the five streams, though lesser than last year and the prediction, has been increasing over the months. In April, it was ₹525.50 crore, it increased to ₹1,479.66 crore in May, ₹1,852.37 crore in June and ₹2,424.79 in July.

Apart from the tax from the five sources, the government also gets money from the Central government in the form of GST compensation and loans. Including this, the total receipts or earning of the Delhi government was ₹18,033.19 crore from April to July last year. The same has dropped to ₹12,288.67 crore this year, which is 32% less.

But after the pandemic struck, the government has cut down its expenses, reducing the effect of the fall in revenue. The expenditure of the government was ₹14,411.94 crore from April to July in 2019 and it has reduced to ₹11,376.44 crore for the same period this year — a reduction of 21%.

“The total income [including contributions from the Central government] for the period has fallen by about ₹6,000 crore compared to last year. But during the same time, the expenditure has reduced by about ₹3,000 crore. So, the net effect is a loss of about ₹3,000 crore,” a Delhi government official told The Hindu.

Strict watch

The Delhi government is monitoring expenses and currently, all expenses above ₹1 crore need the Cabinet’s approval, which was not required before the pandemic.

“Already the earnings are less by about ₹6,000 crore and this is expected to increase over the year in all likelihood. It is safe to assume that the revised budget will be much lesser than the budget of ₹65,000 crore,” the official said.

On July 2, the Delhi government had formed a 12-member committee headed by Dialogue and Development Commission (DDC) Vice-Chairperson Jasmine Shah to explore economic reforms to help businesses recover from the impact of COVID-19.

The committee has not submitted any solutions and is expected to do so in the coming months.

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