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CHAPTER-3
REVENUE RECEIPTS
3.1 IntroductionAs economy grows, the needs of society also grow, increasing the activities
or functions of the State government. These activities involve rising expenditures as
naturally, the States have to spend increasing amounts for satisfying collective
wants. Spending is not possible without managing equal amount of receipts and
hence, the government has to raise public revenue to meet corresponding public
expenditure. It further implies that the government has to think about how, how
much and when to raise revenue from its various existing sources to fulfill its
expenditure requirements in various areas of the economy.
Thus, any government needs income to carry out a variety of functions and
meeting its expenditure. Income of the governments which includes various sources
like taxes, borrowings, fee, donations etc. is called public revenue or public income.
In many studies, the term ‘public revenue’ has been used in two senses – wider and
narrow. In a broad sense, it includes all the income and receipts, irrespective of their
sources and nature, which the government happens to obtain during any period of
time. In addition to those receipts which need not to be repaid, it includes all those
loans also which governments have to repay in future with interest or other services
according to the terms and conditions of the debt. In the narrow sense, it includes
only those receipts of the government which are its own receipts and need not to be
repaid.
The structure of the government accounts is the same for the central and the
State governments, as laid out by the Constitution of India. The budget is divided
into three components – Consolidated Fund, Contingency Fund, and Public
Accounts.
3.1.a Consolidated Fund: Under Article 266(1) of the Constitution of India,
all revenue receipts, all loan raised by the issue of treasury bills, loans or ways and
means advances and all moneys received in repayments of loans by the government
of a State constitute one fund, known as, “The Consolidated Fund of the State”.
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Article 266(3) provides, in addition, that “No moneys out of the
Consolidated Fund of India or the Consolidated Fund of a State shall be
appropriated except in accordance with law and for the purposes and in the manner
provided in this Constitution”. Articles 198 to 207 spell out the manner in which
monetary matters have to be handled at the State level and the role of the State
Legislature.
3.1.b Contingency Fund: Article 267 of the Constitution provides that the
Parliament and the State Legislature may by law establish a Contingency Fund for
the centre and the State respectively. This Fund is like an imprest placed at the
disposal of the government to meet urgent unforeseen expenditures which cannot be
delayed. Legislative approval for such expenditure and for withdrawal of an
equivalent amount from the Consolidated Fund is subsequently obtained and the
amount spent from Contingency Fund is recouped to the Fund.
3.1.c Public Account: Apart from the normal receipts and expenditure of
the government which relates to the Consolidated Fund, certain other transactions
enter into government accounts. For instance, transactions relating to Provident
Funds, Small Saving Collection, Depreciation and Reserve Funds of Government
Departments, Postal Saving Banks, various deposits under the Income Tax Act etc.
belong to this category where the Government acts as a banker because all these
payments are mostly of the nature of banking transactions. This money, as a matter
of fact, does not belong to the government and has to be paid back sometime or the
other to the persons who deposited it. Money thus received is kept in the Public
Account and payments from the Public Account, therefore, do not require
corresponding disbursements from any other Fund.
The total budgetary receipts of the Government of Haryana (or any State
government) can be broadly divided into two types, namely Revenue Receipts and
Capital Receipts.
All the receipts of the government which are non-redeemable in nature (with
no future obligations or received against past transactions) may be termed as
revenue receipts. Revenue receipts comprise the revenue raised by the State
government through various taxes and non tax sources and though central transfers
in the form of shared taxes and grants-in-aid. Those receipts of the government
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which create liability or reduce financial assets are called capital receipts. The main
components of such receipts are borrowings of different kinds and repayment of
loans and advances provided by the government in the past to other parties.
In this chapter, trends in revenue receipts of the State of Haryana are
examined in some detail. This is preceded by summarization of some observations in
the available literature regarding such receipts in the context of State finances in
India. While this provides the context, the rest of the chapter analyzes the revenue
performance of the State in the context of both its own performance over time as
also in a comparative framework in a cross-section analysis. Tax revenues are paid
special attention in view of their predominance in the revenue receipts of the State.
3.2 Review of Literature
Several studies on State finances in India have observed that over a long
period of time, revenue receipts of the States have generally been lower than their
expenditures, leading to high levels of revenue and fiscal deficits. Decline in non tax
revenues was primarily responsible for relative inadequacy of total revenue receipts
of the States, and not the tax revenue component of revenue receipts. For example,
M.G. Rao (1992) found in his study of States as a whole that during the 70s and 80s
tax revenue receipts of the States increased at reasonably high rates and the growth
of central transfers to the States also was higher than that of both central revenues
and States’ own revenues. But non tax revenue receipts, due to reluctance to levy
proper user charges on social and economic services, and declining return from
departmental and non departmental commercial enterprises, followed a low and
declining trend. This in turn adversely affected the overall growth of total revenues
relative to the growth of revenue expenditure. Archana Dholakia (2000) observed a
similar trend of low non tax revenue receipts for the individual State of Gujarat
during the decade beginning with 1991-92. She reported that Gujarat started facing
the problem of fiscal imbalance on revenue account from the year 1984-85 onwards,
which raised fiscal deficit of the State rapidly. While this called for reforms by the
State to raise its revenue receipts, she also underlined that Gujarat was among the
highest taxed States in India whereas in terms of non tax revenue per head of
population, it ranked among the lowest. Low share of non tax revenue in total
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receipts and increased implicit subsidies were responsible for fiscal deterioration of
government of Gujarat.
The share of non tax revenue in the State’s own revenue remained at about
25 percent during the study period which was lower than observed in other,
comparatively rich States. Growth and buoyancy of non tax revenue also showed
deceleration between the pre-reform and reform periods. In Gujarat, the lower
proportion of non tax revenue was attributed to less than 15 percent contribution of
revenue generated out of all publicly provided economic and social services.
On the same lines, I.C. Arya (2004) also highlighted the decelerating growth
after mid-1980s in revenue receipts of the States. Own tax revenues registered low
growth rates because of tax evasion, undervaluation of property during registration,
complicated tax structure, weak administrative machinery, exemption of tax on
agriculture income, very low profession tax and too many exemptions. Non-tax
revenues were also lower, for which the responsible factors were lower recoveries
from public services, viz. low irrigation charges, high level of subsidies, free
availability of electricity to the agricultural sector and various exemptions to the
industries to promote them. Transfers from the center were also lower because
financial condition of central government also deteriorated during the study period
(from 1980s to 2001).
The positive role played by healthy growth in tax revenues is also
emphasized by R. K. Mishra (2000) in his assessment of State finances in Andhra
Pradesh. He shows that during 1974-82, fiscal position of Andhra Pradesh was
sound because during this period, revenue receipts increased by 16 percent p.a.
whereas revenue expenditure increased by a considerably lower rate of 3 percent p.a.
But after that, revenue receipts declined from 17.8 percent of GSDP in 1986-87 to
13.3 percent in 1997-98. This decline was contributed by low tax buoyancies in
comparison to other 14 major States especially in case of excise duties due to which
tax revenue receipts declined continuously. This decline to some extent was caused
by smaller non tax revenues, which declined due to sickness in and losses of large,
medium and small industries in public sector, lower user charges of services
provided by government, and lower recovery of cost especially in irrigation and
power sector.
Another specific example of the developments noted by Arya was provided
by the State of Uttar Pradesh, as narrated by Naseem A. Zaidi (2002) in his study
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for the finances of this State during the period 1990-91 to 1998-99. During his study
period, tax revenues were not buoyant due to various tax exemptions (especially in
trade tax), lower tax rates and inefficient tax administration. Negative contribution
or losses of public sector undertakings in the power sector with high costs and
irrational tariff structure, low and negligible recovery rates in the case of major and
medium irrigation and road transport as well as other economic and social services
were the responsible factors for the lower non tax revenue receipts. Total revenue
receipts increased by 10.93 percent per annum while revenue expenditure grew by
14.57 percent per annum during the study period. Due to the increasing gap between
revenue receipts and revenue expenditure, more than one third of total receipts were
mobilized in the form of capital receipts (borrowings). Debt-SDP ratio which was
2.1 percent in 1990-91 increased to 4.1 percent in 1998-99. Consequently, interest
payments, which were 15.4 percent of revenue receipts in 1990-91, increased to 31.7
percent in 1998-99. High debt servicing raised the question of sustainability of
finances of U.P State government.
Rao (1992) suggested that the State governments should rationalize and
simplify their tax structures. In sales tax, the number of tax rates should be brought
down to two that will reduce both administrative and compliance costs significantly.
To reduce tax evasion and undervaluation of immovable property, stamp duty and
registration fee (SDRF) rates should also be reduced. Due to reduction in tax rates,
tax revenue will not decrease because declining rates will open new doors of
investment and income generation which will enhance tax revenue. To increase non
tax revenue receipts, in the case of public sector undertakings (PSU), State
electricity boards (SEB), road transport corporations (RTC) and other social and
economic services, especially in public health, education and water supply, the
government should raise user charges on the basis of cost recovery criteria. In some
cases, like health, education, water supply etc. which are essential and have
externalities, the government should use price discrimination policy according to the
financial position of people so that only poor people of society can get benefit or
concession on the goods and services provided by the State government. Arya
(2004) similarly suggests that the tax structures had become very complicated which
aided avoidance and evasion and made administration difficult. Therefore, tax
structures needed to be simplified with low tax rates so that cost of collection
decreases and net collection increases. For raising higher revenues from SDRF, he
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suggested the use of State level valuation/verification of property instead of doing it
at the registering office. He also felt that large farmers should be brought into the tax
net. On the one hand, it will raise revenues and on the other, it will check evasion of
tax on urban income using agricultural income (by purchasing some land for
agricultural purpose) as a disguise. Governments should also increase user charges
of various public services.
Dholakia (2000) singled out low user charges and poor recovery of costs as
the factors responsible for the low proportion of non tax revenue in total receipts of
Gujarat. She felt that the widening gap between effective prices (effective prices
include actually announced price and cost of other services like transport etc. at
which public goods/services reached to the people for consumption) and announced
(by government) retail prices due to inefficiency was responsible for increase in
implicit subsidies. During the study period, total subsidies doubled and out of these
the proportion of targeted and merit subsidies were quite small as compared to non
merit and non targeted subsidies. Due to already high tax burden and declining
financial position of the State, the only option it had was to raise its non tax revenue
and reduce, especially (or at least), implicit subsidies. User charges of many social
and economic services were untouched for more than a decade. Government of
Gujarat took some measures at the end of 1990s to raise recovery rates but these
measures were not very successful whereas performance of non departmental
undertakings improved significantly and their recovery rates were considerably
higher than the national average.
She suggested that the State government should revise user charges on the
basis of cost recovery criterion and privatize those sectors which produce non merit
goods, by which on the one hand, government’s subsidies (implicit) will decrease
and on the other hand, due to activation of market mechanism, efficient prices will
be determined and quality of such goods and services will also improve. Last but not
the least, the government should reduce political interventions in departmental
undertakings.
Mishra (2000) felt that in the case of the SEB, the State government (of
Andhra Pradesh) should try to minimize transmission and distribution loss. The
government should invite private parties for the generation of electricity and to
facilitate private generation, the government should ensure supply of fuel to them
which was a major problem in the generation of electricity in the State. In the case of
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health, education, welfare programme and irrigation government should raise user
charges on the basis of capacity to pay and affordability.
Zaidi (2002), apart from advocating increase in tax buoyancies by
withdrawing the plethora of exemptions and by adopting uniform floor rates adopted
in different States and union territories, also suggested curbing the growth of
revenue expenditure by cutting non essential subsidies especially from power and
agriculture sector. He felt that a policy of privatization should be adopted for power,
road transport, irrigation sector and other sick PSUs to provide relief to the State
finances. A Fiscal Responsibility and Budget Management Act (FRBMA) on the
line of the one adopted by the Union Government could provide some legally
binding impetus to the State for containing fiscal and revenue deficits.
Saumitra Chaudhuri (2000) examined the changes in the finances of State
governments in India, at the aggregate level, during the period 1980-2000. The
author divided these two decades into four periods: the first period was from the
early 1980s ending with 1984-85, the second covered the second half of the 1980s
and up to 1990-91, the third started from the beginning of the reforms (1991-92) and
ran up to 1995-96 and fourth beginning with 1996-97 up to 2000. Of these four
periods, revenue receipts were focused upon in the analysis of the second half of
1990s or the fourth study period, during which revenues fell more than expenditure,
leading to a reversal of the earlier trend of declining deficits and of debt levels.
During this study period, the decline in the States’ own tax revenues at 15 percent of
total decline was less important than the 25 percent contributed by the States’ own
non tax revenues. Two main reasons were identified by the author as responsible for
the decline in the State’s own tax revenue. First, the States reduced sales tax rates in
order to wean business away from neighbours. The affected then had little option but
to match the lower rate. The impact of this was widespread losses of sales tax. The
second reason was that sales tax concessions were given to new industrial
undertakings and they were not liable to pay sales tax for the concession years. Not
only this, new undertakings with sales tax concession often drove a pre-existing
sales tax paying industrial unit out of business, leading, therefore, to another source
of revenues loss. Central Transfers, both share in central taxes and grants, also
declined during whole decade of 1990s. Grants declined more in comparison to
share in central taxes.
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Measures to broaden the tax base were introduced when the centre adopted
VAT in place of sales tax and all the States barring eight followed suit from April
2005. But there have been controversies about the adoption of VAT due to fear of
reduction in sales tax revenue in States. R. Kavita Rao (2004) concluded in her
study on estimation of the impact of introduction of VAT that the impact varied
considerably across States; while some States seemed to gain consistently with such
a transition, in some other States the gains converted into losses depending on the
assumptions on increments to value added. The estimates were based on the
assumption of adopting uniform VAT design in all the States. The author suggested
that one way for the States to avoid incurring losses with introduction of VAT would
be through appropriate variations in the rates and/or structure of tax. Variations in
the tax structure, however, were being perceived as hindrances to the formation of a
common national market. Clearly, the cost of imposing/assuring such uniformity
would need to be borne by the Union Government. The central government’s
assurance of compensation could, however, trigger off a negative response from the
States when poor collection was rewarded.
Some Economists feel that to make the revenue and expenditure reforms
more effective amendment of the constitution was needed. M. G. Rao (2002)
highlighted in his study that inefficiency and distortion in the sub national fiscal
policy were due to (i) complicated tax structure which was in turn due to multiple
objectives of tax policy, weak governance, poor information system, weak
administration and ineffective enforcement mechanism, on the revenue side, and (ii)
(a) proliferation of expenditure in salaries, pensions, interest payments and subsidies
which crowded out outlays on creation and maintenance of physical infrastructure,
artificial distinction between plan and non plan expenditure has caused expenditure
profligacy, (b) low productivity of public expenditure, and (c) proliferation of
central sector and centrally sponsored schemes which distorted the priorities of
expenditure with respect to the physical infrastructure requirement of the States, on
the expenditure side.
Due to deteriorating financial condition of States, inefficiency and distortion
in fiscal policy, not only achievement of fiscal consolidation but also restructuring
the administrative machinery, downsizing of bureaucracy, prioritizing expenditure
allocation to provide quality infrastructure, increasing allocation to human
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development and creation of business friendly environment were some critical
challenges which State governments had to face. In an era of fragmented polity and
coalition politics, the challenges were even more serious in the task of improving
non tax revenue by increasing user charges and fees. These challenges required
reforms in expenditure and tax systems, power sector and restructuring State
enterprises, administrative re-engineering, building up a proper information system
and computerization of tax administration. Although State governments took several
measures to raise tax revenue, for success of these reforms it was necessary to
enable the States to levy taxes on services. Therefore, the Constitution needed to be
amended to provide concurrent power to taxing services to the States.
To Sum up, it is observed from the above review of literature that after the
mid 1980s and during the decade of 1990s, tax and non tax revenue receipts have
been lower which called for reforms to raise revenue receipts from the available tax
and non tax revenue sources. Tax revenue receipts have been lower due to
complicated tax structure, rate war (of reduction) in sales tax among States to wean
business away from their neighbours, tax concession to the new industrial
undertakings etc. Non tax revenue receipts have been lower due to lower user
charges, lower contribution and losses of PSUs & SEBs, high cost production and
irrational tariff structure etc. Although some measures have been adopted by the
States and central government to raise revenue receipts of the States, these measures
have been controversial. Adopting the suggestions made by various
economists/authors in the literature discussed above may not be easy; impact of
these suggested measures will vary State to State. Therefore, before adopting any
suggestion there is need to have correct estimates of the impacts of the concerned
suggestions, which requires improvements in the methodologies adopted to estimate
such impact; further, the adoption of some measures would require some
amendments in the Constitution also.
Most of the above studies were based on all general category States or at
aggregate level of States of India. The present chapter will now examine the revenue
receipts of Haryana State government and try to find out areas where there has been
further scope for the State government to raise its finances, although by the end of
the study period, fiscal key indicators of Haryana State had improved significantly.
In what follows in the rest of this chapter, sections on (i) structure and trends
of own tax revenues receipts of the Haryana State government, (ii) a detailed
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exercise of tax effort in Haryana (both cross section and time series analysis) and its
comparison with the tax efforts of other major general category States (only for
cross section analysis), (iii) size, trends and major components of non tax revenues,
and (iv) trends of central transfers (shared taxes and grants) cover different aspects
of revenue receipts in the State of Haryana.
3.3 Composition of States’ Revenue ReceiptsA State’s revenue receipts comprise of tax and non tax revenues and
transfers from the centre. The tax revenues of the State government comprise of two
parts:
1. Revenue from State’s Own Taxes such as Agricultural Income Tax, Taxes
on Professions, Trades, Callings & Employment, Land Revenue, Stamp Duty
and Registration Fee, Urban Immovable Property Tax, Sales Tax (including
State sales tax, sales tax on motor spirit and lubricants, surcharge on sales
tax, receipts of turnover tax, other receipts), State Excise Duty, Taxes on
Motor Vehicles, Taxes on Goods and Passengers, Electricity Duty,
Entertainment Tax and Other Taxes (includes taxes on advertisement, betting
tax, receipt under the Sugarcane (Regulation) Supply and Purchase Control
Act., Taxes on entry of goods into local areas, toll tax etc.). Not all these
taxes are levied by each State, however. Also, sometimes one tax is merged
into another under one Act.
2. Share in Central Taxes as determined by the successive Finance
Commission for every five years. Before the Eleventh Finance Commission,
these included mostly share of Personal Income Tax and Central Excise
Duty, but include the entire central tax collection net of cost of collection,
excluding those ascribed to State level taxes collected by the centre in the
Union Territories.
The non tax revenue of State governments also comprise of two parts:
1. State’s Own Non Tax Revenue includes revenue from Interest Receipts,
Dividend and Profits, and receipts from (user charges/ prices/ fees) General,
Social and Economic Services.
2. Central Transfers include transfers from the centre to the State in form of
Grants in Aid. States receive normal Plan transfers through the Planning
Commission, grants under the Central Plan/Centrally Sponsored Schemes,
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grants through the Finance Commission and other (discretionary) grants
from central Ministries.
3.4 Own Tax Revenues: Structure and TrendsThe total revenue receipts of the Haryana State in absolute amounts,
components of State’s revenue receipts as percentages of total revenue receipts and
GSDP have been shown in Tables 3.1, 3.1(a) and 3.1(b) respectively.
Total revenue receipts of Haryana State fluctuated between 12 percent and
22 percent of GSDP without following any particular trend and have been around 14
percent of GSDP during the last five years of the study period. It has been observed
from Table 3.2 that total revenue receipts of all general category low income States
except West Bengal have been more than the high income States including Haryana.
On an average, the contribution of State’s own revenue receipts (tax and non
tax) in total revenue receipts has been generally more than 85 percent, remaining
around 15 percent coming from central transfers (shared taxes and grants). This is
mainly a consequence of the relatively high per capita income of the State and the
successive Finance Commissions’ endeavor to make the statutory transfers
progressive in terms of per capita income of recipient States. Contribution of own
tax revenue in total revenue receipts is increasing continuously after dropping
marginally in the year 2002-03 without any increase in contribution of non tax
revenue. As compared to all other general category States also, except Maharashtra
and Tamil Nadu, tax revenue receipts as proportion of GSDP in Haryana has been
higher than all other low income and high income states (Table 3.2 (a)).
Haryana has consistently had relatively high own tax-GSDP ratio in
comparison to other general category States. To put the issue in perspective, its
figures from 2005-06 (9.7 percent) may be compared with those of Goa (10.4
percent), Karnataka (11 percent), Maharashtra (8.0 percent), Punjab (9.3 percent),
Tamil Nadu (11 percent) and Gujarat (8.1) among high income States on the one
hand, and Andhra Pradesh (8.5 Percent), Bihar (5.9 percent), Madhya Pradesh (8.4
percent), Orissa (7.9 percent), Kerala (8.7 percent), Rajasthan (8.14 percent), Uttar
Pradesh (7.3 percent) and West Bengal (4.5 percent) among low income States on
the other hand. It is clear that level of own tax-GSDP ratio, except Goa, Karnataka
and Tamil Nadu, in all other high and low income States have been lower than the
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level of Haryana State. In recent years state has overtaken Kerala, Gujarat and
Maharashtra in term of own tax-GSDP ratio.
Table 3.3 (a), (b) and (c) present the details of individual own tax revenues
of Haryana in absolute amount, their contribution in total own tax revenue and as
ratios of GSDP. In most of the years of the study period, total own tax revenue as a
proportion of GSDP has been around 7.5 percent (on an average), but from year
2001-02, tax-GSDP ratio in Haryana increased continuously and first time reached
to around 10 percent of GSDP in year 2005-06 which has been the highest during
whole study period.
As is usual, sales tax/VAT accounts for the largest part of own tax revenue
receipts. The State introduced VAT element into its sales tax structure in April 2003.
Haryana was the State that adopted VAT first among all other States of India. Post-
VAT revenue from sales tax does seem to be at a higher level on an average
compared to the pre VAT levels. Due to greater revenue raising potential of VAT,
share of other taxes in total own tax revenue receipts declined significantly. In
Haryana, the State levies only State sales tax and also collects the central sales tax;
other elements of sales tax (like turnover tax) were not in use in Haryana.
To encourage the States to introduce VAT, the centre provided the incentive
of compensating any revenue loss on a gradually reducing basis for a finite period
from 2005-06. It may also be noted that one part of the sales tax, central sales tax
(CST), is slated to be phased out. As per an agreed package of compensation, there
were monetary and non monetary incentives provided to the States by the GoI.
These include abolition of the facility of inter-State purchases by government
departments at concessional rates against form-D, levy of VAT on tobacco at the
rate of 12.5 percent by the States and transfer of the proceeds of tax on identified
services to the States; necessary legislations and amendments were also carried out.
In case these measures were inadequate to cover the revenue loss, cash
compensation was to be provided. The impacts of these are difficult to trace fully,
since that of abolition of Form-D and VAT on tobacco are subsumed under tax
devolutions from the central government. The cash compensations are included in
the central grants.
After sales tax, revenue from Excise Duty contributed a major part of total
tax revenue receipts till year 1995-96. The bulk of the collection in Haryana, as in
other States, is from country spirits and Indian-made foreign liquor (IMFL) in
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almost equal measures; it is believed that excise collections from country spirits are
riddled with evasion and illicit production. The major part of the collections is from
the duty levied, and to a much lower extent from the license fees. The heavy reliance
on duty levied makes the system over-susceptible to unrecorded
production/sales/transfer; an appropriate auction of vends could perhaps capitalize
some of the duty evasion in the license fees and augment revenues. However,
experience in other States shows that often the integrity of the auctions of vends are
compromised through cartelization of bidders, and hence this option may be a risky
one. In the year 1996-97, Government of Haryana prohibited the consumption of
liquor in the State because of which its contribution in total tax revenue receipts
decreased to only 2 percent. Even after removing prohibition after 2 years,
contribution of State excise duty increased to a level lower than that observed before
mid 1990s. Rapid increase in share of sales tax revenue in total tax revenue receipts
may be one of the reasons for the lower level of contribution of other taxes.
After Sales Tax and State Excise Duty, Stamp Duty and Registration Fees
(SDRF) contributes a substantial share in total tax revenue receipts of the State. The
contribution of SDRF in total tax revenue receipts has been between 7 percent and
13 percent without following any particular trend. Due to rapid industrialization and
land acquisition in the State, it was expected that collection under this head will
increase significantly, but its ratio to GSDP increased very marginally and has
always been below 1 percent of GSDP except in the year 2005-06. The expected
increase was offset by evasion of tax through undervaluation of property during
registration, reduction in tax rates and exemptions in rates given as incentives for
industrial growth were inter alia the reasons for the lower contribution of SDRF.
Land revenue collects a small part of the tax revenue receipts in Haryana
State like other States, although Haryana has relatively higher agricultural incomes.
It followed a declining trend from 1980-81 to 1999-00. Although there have been
some improvements subsequently, revenue impact of such improvements have been
marginal. Revenue from all other taxes contributed only marginal shares in total tax
revenue receipts and followed declining trend. Actually, performance of most of the
other taxes depends on economic development of the economy.
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The highlights of the above discussion may be summarized as follows:
(1) Level of own tax-GSDP ratio, except Goa, Karnataka and Tamil Nadu, in all
other high and low income States have been lower than the level of Haryana
State. In recent years state has overtaken Kerala, Gujarat and Maharashtra in
term of own tax-GSDP ratio.
(2) State receives more than 85 percent of its total revenue receipts from its own
revenue sources i.e. own tax revenue and non tax revenue sources and only
around 15 percent from central transfers (in form of shared taxes and grants),
(3) In own tax revenue receipts Sales tax, State Excise Duty and Stamp Duty
and Registration Fee occupied 1st, 2nd and 3rd position respectively and
together contribute around 90 percent of total own tax revenue receipts
although all taxes other than sales tax exhibit declining shares, and
(4) After implementation of VAT in year 2003, sales tax revenue increased so
rapidly that other sources of taxes could not increase their share of
contribution in total own tax revenue receipts in spite of increase in absolute
amount.
3.5 Buoyancy and Elasticity of Own Tax Revenue of HaryanaBuoyancy and elasticity of taxes could be taken as indicators of overall
performance of tax structure of the State. Tax revenue depends upon its base and any
possible changes in tax rate. The tax structure determines the extent to which the tax
actually covers the designated base; changes in the tax structure and or/effective rate
of tax (including exemptions, concessions etc.) are known as ‘discretionary
changes’. The widest possible tax base for a State level tax would normally be the
Gross State Domestic Product, since the base of any State level tax would be a part
of the GSDP. In other words, if the GSDP increases, the revenue from various taxes
should also increase, though possibly to varying degrees depending on the actual tax
base, as it is understood that tax revenue is a function of State Income. Buoyancy
coefficient represents the increase in tax revenue in account of not only increase in
the GSDP but also due to discretionary changes. If the tax series is cleaned for
discretionary changes, we get, what is known as ‘elasticity’ of the tax with respect to
change in GSDP (i.e. tax base) only. The difference between tax buoyancy and tax
elasticity can constitute a summary measure of the extent to which the government
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has been active to raise its tax collections. However, it could also be argued that a
good tax design can improve the elasticity of the tax, and hence the need for
undertaking regular discretionary changes is less. Thus, if difference between
buoyancy and elasticity is high, it means that the State government plays a very
important role in the policy making and in implementation of those policies to raise
its tax revenue receipts. However, there is no direct relationship between the
difference between buoyancy and elasticity and the performance of the government;
a small difference with high buoyancy could show the impact of a good tax design
and not necessarily poorer performance.
Buoyancies and Elasticities of various kinds of taxes during different study
periods have been given in Tables 3.4 and 3.5 respectively. Difference between
buoyancy and elasticity, to see the performance of the government to raise its
revenue receipts has been shown in Table 3.6.
3.5.1 Methodology to Estimate Buoyancy and Elasticity of Own Tax Revenue
Tax Revenue depends upon its base and any possible changes in tax rate. If
certain rate changes are introduced, they are known as ‘discretionary changes’,
normally, for many taxes, the base is the State Domestic Product. In other words, if
the GSDP increases, the tax revenue also increases as it is understood that tax
revenue is a function of State Income. Buoyancy coefficient represents the increase
in tax revenue in account of not only increase in the GSDP but also due to
discretionary changes. If the tax series is cleaned for discretionary changes, we get,
what is known as ‘elasticity’ of the tax with respect to change in GSDP (i.e. tax
base).
For calculation the elasticity coefficient, the yearly gross tax revenue data are
initially adjusted for the respective year’s discretionary changes and further for the
cumulative effects of the previous years’ discretionary changes. The detailed
adjustment method applied to Indian data is spelt out in Prest, A.R.(1962) and Rao,
V.G. (1979).
To estimate the buoyancy and the elasticity coefficient for the individual own
taxes, the following equations are used.
Log T= log a + b log Y + u…………………….. (1)
Log AT = log α + β log Y + v…………………. (2),
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where,
T = Acutal Tax Revenue;
AT = Adjusted Tax Revenue;
Y = Gross State Domestic Product and u and v are the error terms.
The coefficient, b, in equation (1) gives buoyancy and β, in equation (2)
gives elasticity of tax structure.
Buoyancy and elasticity of taxes, as indicators of overall revenue
performance of the tax system of the State, could be of significance in the context of
additional resource mobilization because different taxes behave in different ways
while responding to various policy measures. The growth of the tax revenue
corresponding to the growth of the State income is captured by the buoyancy
coefficient. But elasticity estimates show the response of tax revenue to the
automatic change in State income which, in other words, represents the built-in -
flexibility of the tax system itself.
3.5.2 Buoyancy and Elasticity during 1986-87 to 1995-96
During this phase, Government of Haryana made efforts to raise revenue
from sales tax only, but these efforts were not very fruitful. It may be recalled
[Chaudhuri (2000), briefly discussed in the review of literature in this Chapter] that
this was a period of ‘rate war’ among Indian States; Government of Haryana also
reduced sales tax rates due to which sales tax revenue increased in absolute amount
only marginally but the overall impact was that buoyancy has been less than unity
i.e. 0.986 despite these efforts.
The differences between buoyancy and elasticity for Sales Tax, Total Tax on
Commodities and Services, and Total Own Taxes were 0.02, 0.007 and 0.005
respectively during this phase and for all other taxes, the difference was nil. In fact
difference between buoyancy and elasticity for Total Tax on Commodities and
Services, and Total Own Taxes (sales tax is included in these taxes) has been due to
efforts made by government to raise sales tax revenue only.
Buoyancy and elasticity of all other individual taxes remained same implying
no special policy thrust by the State to raise its tax receipts from taxes other than
sales tax. However, in addition of sales tax, elasticity of Excise Duty, Taxes on
Vehicles and Stamp Duty and Registration Fee has been greater than unity,
indicating a stronger positive link between GSDP and the specific base for these
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taxes and vice versa in case of all other taxes. Buoyancy and elasticity of
Entertainment Tax has been negative, this was the tax which was in worsen
condition than all other taxes for which buoyancy and elasticity has been less than
unity.
During this period (1986-87 to 1995-96), Government of Haryana took only
the following measures to raise its tax revenue:
Sales Tax: Through possibly better tax compliance via reduction in tax rates
on various items, the government raised its tax revenue receipts by Rs. 15 Cr.
Non Tax Revenue: Through increase in passenger fare in road transport
services, non tax revenue receipts increased by Rs. 45 Cr.
Obviously, there was no great effort to mobilize additional revenues, except the
two instances noted above. The overall conclusion is that this was a phase in which
revenue performance of the State government was stagnated.
3.5.3 Buoyancy and Elasticity during 1996-97 to 2005-06
During this phase, elasticity of sales tax, taxes on goods and passengers,
State excise duty and entertainment tax increased whereas elasticity of electricity
duty, taxes on vehicles, and other taxes declined substantially. Positive elasticity of
other taxes during previous phase became negative during this phase. In the case of
land revenue, elasticity has always been below 1 but in this phase, it increased to
1.878. In the case of SDRF, although elasticity has always been above 1, in this
phase it increased to 1.329, which was higher as compared to previous phase.
Elasticity of SDRF increased due to acquisition of land by GoH and establishment
of industries in Faridabad and Gurgaon districts of the State, resulting in
significant rise in number of land transactions that drove the growth of SDRF
without any discretionary change in the tax structure (including rates).
This phase of the revenue performance of Haryana State was better in
comparison to the previous phase. This was the phase in which elasticities of total
taxes on commodities and services, and total own taxes increased to 1.46 and 1.444
respectively - greater than the elasticities of previous phase. But when we come to
the government’s performance in taking tax policy initiatives in this phase to raise
tax revenue, the results show that the government did nothing much except for
‘other’ taxes; the gap between elasticities and buoyancies of all the rest of the
individual taxes were zero. During this phase, elasticity increased due to change in
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specific tax base only. During this phase, the tax performance improved, but more as
a result of the pattern of development that expanded the taxable base and less
because of government initiatives in tax policy. This is borne out by the fact that
during this phase, the difference between buoyancy and elasticity of total taxes on
commodities and services and total own taxes was 0.001 in both the cases, which
was negligible and is a symbol of inactive government.
3.5.4 Buoyancy and Elasticity during 1980-81 to 2005-06
During 1980-81 to 2005-06 (a fairly long period) as a whole, barring
elasticity of Sales Tax and SDRF, elasticity of all other taxes are estimated to be less
than unity. Clearly, There is scope for the government to raise its revenue receipts
by taking suitable steps with respect to the above said taxes in which government’s
effort has been nil during the whole study period. In the case of electricity duty and
entertainment tax, elasticity has been negative. This particular result is not
uncommon among States in India, mainly because the specific tax base of
entertainment tax (tickets sold in cinema halls primarily) has been shrinking over the
years, while the poor financial performance and liquidity problems of State
Electricity Boards resulted in non-remission of the electricity duty collected from
consumers to the government accounts on a regular basis.
3.6 Tax Effort in Haryana: A Detailed ExerciseTo examine the tax effort of Haryana, a cross section analysis of 15 major
General Category States on the basis of average data of 3 years, and a time series
analysis for Haryana State government alone during the entire study period have
been done. These two analyses are discussed and their results are reported below.
3.6.1 Tax Efforts and Taxable Capacity of State Governments (2002-03 to
2004- 05): A Cross Section Analysis
Taxable Capacity and Tax Effort are two different concepts. Taxable
Capacity denotes to which extent government can possibly draw funds from its
available resources whereas tax effort denotes to which extent government is
actually exploiting its available resources. Since it is difficult to estimate taxable
capacity in an absolute sense (any such estimation is certain to be arbitrary), relative
taxable capacity is estimated in empirical studies on the basis of a norm derived
90
from actual data. Relative tax effort index may be then defined as a ratio of actual
tax revenue to the estimated relative taxable capacity of the concerned tax.
At the national level tax-GDP ratio, or in the case of States tax-GSDP ratio,
is a simple and often used measure to evaluate tax performance of the government.
The implicit assumption involved in using such ratios for the purpose of comparing
tax performance is that GDP (or SDP) is an indicator of taxable capacity and thus
suitable for normalizing the tax collection for comparison across government units.
This assumption, however, ignores various capacity indicators or factors such as size
of population, administrative capability, degree of monetization, availability of tax
handles etc. The second problem relates to the implicit assumption involved in any
simple ratio -- that the relationship between the broad tax bases adopted and tax
revenue is linear and proportional, which is not necessarily the case. So, GDP, SDP
or any other broad indicator is an imperfect proxy for the tax base, especially when
the tax structure consists of a combination of a number of different taxes falling on
distinct tax bases. Therefore it is necessary to take into account these independent
variables or proxies (other than GDP/SDP) also which affect taxable capacity of a
particular tax significantly, directly or indirectly.
In the past, a number of methods have been used to estimate relative taxable
capacity and tax effort. However the following two methods were used extensively:
(i) The Aggregate Regression method, and
(ii) The Representative Tax System method.
The Aggregate Regression Method
Aggregate Regression Method is based on the estimation of a (usually
multiple) regression equation which attempts to explain the variations in a tax
revenue variable across different entities or units (like countries or State), which is
either in absolute or normalized i.e., standardized in some form, using independent
variables, hypothesized to be the ‘ultimate determinants’ of taxable capacity. The
choice of independent variables depends partly on the theory and the supposed
nature of relationship of the tax in question and partly on their ability to explain the
variations in the dependent variable. The choice of from of equation, however,
depends entirely in the fit. The purpose generally is to explain the variations as far as
possible due to the capacity variables which are beyond the control of the tax
authorities and ascribe the rest of the variations to tax effort by the government
91
concerned. This method is normally used for aggregate tax effort for both inter-
county and inter-State analyses, but its use for more disaggregated analysis is also
possible. The limitation of this method is that it mixes up pure statistical error with
tax effort; the implicit assumption is that the errors are not large enough to invalidate
the comparison of relative tax efforts.
This aggregate regression method has been used in a number of studies like
Lotz and Morse (1967), Bahl (1971), Chelliah (1971), Reddy (1975), Dwivedi
(1985), and Oommen (1987) to study the inter-State or inter-Country tax effort.
The Representative Tax System Method
This is essentially a method applicable to disaggregated analysis only. This
method was popularized by the U.S. Advisory Commission on Intergovernmental
Relations (ACIR) in 1962. It involved identifying actual bases, or when the actual
bases cannot be easily designated, suitable proxy bases for individual taxes and then
calculating an effective tax rate for each tax as a ratio of actual tax revenue to the
actual/proxy base. A normative tax rate is then derived from this effective tax rate
over the observations (e.g. an average) and applied to the actual or proxy bases used.
This yields the taxable capacity or the tax potential for each tax. Taxable capacities
can be summed across taxes to arrive at the aggregate capacity; an index of
aggregate tax effort can then be arrived at by taking the ratio of the aggregate
collections against the aggregate capacity so derived. This method is used in a
number of studies e.g. ACIR (1962), Bahl (1972), Thimmaiah (1979), Chelliah and
Sinha (1982).
In this study, the Regression Method has been used, to estimate taxable
capacity of various States for aggregated as well as disaggregated taxes. The
Representative Tax System Method has been used only to estimate tax potential of
Other Taxes of Haryana in Time-Series Analysis.
3.6.2 The Cross-section Analysis
The first set of estimates is based on a cross section analysis and confines
itself to estimating tax effort for 15 major non special category States. These are:
Andhra Pradesh, Bihar, Goa, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh,
Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West
Bengal. Special Category States of the North East (Such as Manipur, Meghalaya,
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Mizoram, Nagaland, Sikkim and Tripura) have not been included in the study.
Similarly the newly formed States such as Chhattisgarh, Jharkhand and Uttaranchal
have been excluded (not clubbed) due to non-availability of data for many variables
used. States are ranked according to their tax effort, the State which has highest tax
effort index is assigned 1 and lowest tax effort index is assigned 15.
To avoid the impact of fluctuations in a particular year, the study uses three
year averages, using data for the period 2002-03 to 2004-05. Year 2005-06 has been
excluded from the study because data on several variables for many States were not
available for this year (2005-06).
Now we propose to define the variables and the functional form of
relationship which are being estimated in the study. In this study, State taxes which
are subjected to analysis have been grouped into seven categories. In what follows,
we describe each of them, along with the equation to be estimated for each category.
Land Revenue and Agricultural Income Tax
Land Revenue includes land tax, cesses based on the land revenue, special
crop cesses and surcharge and betterment levy. Agricultural income tax (AIT) is
levied on only one part of income, which is derived from agriculture. In practice,
individuals are not subject to this tax and only commercial income from the business
of agriculture is covered. Taxable capacity of Land Revenue and AIT has been
postulated to depend on: (i) productivity of land, which may be defined as the ratio
of SDP from agriculture to net sown area, (ii) percentage of small landholdings in
total rural landholdings, (iii) Net State Domestic product from Agriculture, and (iv)
income from plantations. This can be shown by the following equation:
LAT = f (PROD, SLH, NSDPa, D)
LAT = Land Revenue and Agricultural Income Tax;
PROD = Productivity of land or Ratio of State Domestic Product from Agriculture
to net sown area;
SLH = Percentage of Small Landholdings (below 5 acre) in Total Rural
Landholdings;
NSDPa = Net State Domestic Product from Agriculture;
D = Dummy variable for State with substantial amount of plantation income.
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Regressions were run using the postulated log linear relations. Co-efficients
of all the explanatory variables except NSDPa were found to be statistically
insignificant. Therefore, following equation has been used to estimate the tax
capacity for this particular tax:
Log (LAT) = a + b log (NSDPa)
Stamp Duty and Registration Fee
The State government gets revenues from Stamp Duty and Registration Fee
charged from persons when they transfer moveable and immovable property to
others or register various financial instruments. Government charges registration fee
or stamp duty at different rates on different types of instruments. By far, the bulk of
this tax is derived from transfer of real estate (or rights to it) through sales, lease or
mortgage. Hence, the base of the tax should be the market value of property bought
or sold in the State. But first of all, accurate data on various kinds of property
transacted are not available for all the States included, and the second is that there
are serious problems with the available data on this base; during registration people
show lower value of property than the real market value to evade registration fee and
stamp duty. If we use this variable as a base to estimate tax potential, the tax
potential will be under estimated.
Therefore, in this study we tried to use four other proxy explanatory
variables, viz. Urbanization, Per Capita Net State Domestic Product, Density of
Population and GSDP from Construction Activities. But in the estimated equation,
co-efficient of GSDP from construction activities was statistically insignificant;
therefore this variable has been dropped from the equation. While t-values of
estimated parameters of other variables were also not very significant, if we dropped
any other variable, value of R-square decreased significantly. Therefore other
variables were retained in the equation in spite of statistically insignificant parameter
values. The following log linear regression equation has been used to estimate tax
potential of stamp duty and registration fee:
Log (SDRF/POP) = a + b1 log (URBAN) + b2 log (PCNSDP) +b3log
(DENSITY)
94
SDRF = Stamp Duty and Registration Fee collections;
POP = Population of States as per 2001 Census;
URBAN = ratio of Urbanization to Population as per 2001 Census;
PCNSDP = Per Capita Net State Domestic Product at Current Prices;
DENSITY = People Density (as per 2001 Census).
In this equation SDRF is divided by population to standardize the equation to
make comparison among States.
Sales Tax
Haryana gets approximately 70 percent of tax revenues from sales tax.
Haryana is the first State which introduced VAT in the place of sales tax in 2003. It
has since been replaced by VAT (in 2005 in almost all States). Sales tax is levied on
all sales and specified purchases in the States. Sales tax includes general sales tax
(GST), sales tax on motor spirit and lubricants, surcharge on sales tax, receipts of
turnover tax, other receipts and central sales tax.
Sales tax is levied in all the States. In general, there are four rate categories
for sales tax i.e. 0, 4, 8 and 12 percent which were introduced with VAT but the rate
structure of sales tax for different commodities varies from one State to another.
Tax potential of sales tax depends on the value of commodities actually sold
in the State excluding those sales immediately preceding exports. But data on these
variables are not available in the required form and hence, for this study we dropped
the idea of using the above variables and used per capita Net State Domestic
Product, urbanization as per 2001 census, ratio of agriculture in Net State Domestic
Product at Current Prices and number of Scheduled commercial bank branches in
States as an explanatory variables because these variables also represent influences
on the sales tax potential. As income and urbanization increases, size of sales
transactions also increase, while the use of banking facilities proxies monetization
and formalization of the State economy, which is necessary to bring the transactions
into the tax net. The share of agricultural income is essentially a dampening variable
because the agricultural sector is largely outside the sales tax coverage. However,
this is not uniformly the case in all States, and perhaps for that reason, during
estimation of the regression, parameter value of share of agriculture in NSDP was
not significant and was even adversely affecting the statistical significance of the
parameter values of other variables also. Therefore, this variable was dropped from
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the equation. The log linear equation given below has been used to estimate sales tax
potential:
Log (Sales Tax/POP) = a + b1 log (SCBB/POP) + b2 log(PCNSDP) +
b3 log(URBAN)
Sales Tax = Sales Tax including Central Sales Tax;
POP = Populations of State as per 2001 Census;
PCNSDP = Per Capita Net State Domestic Product at Current Prices;
URBAN = Percentage of Urban Population of the State in the Total Population as
per 2001 Census;
SCBB = Scheduled Commercial Bank Branches in the States.
State Excise Duty
State Excise Duty is mainly levied by the State governments on alcoholic liquor
for human consumption and opium, Indian hemp and other narcotic drugs and
narcotics as also medicinal and toilet preparations containing alcohol. A major part
of the revenue under this tax comes from production and consumption of spirituous
beverages of which alcohol is the most important component.
As consumption of alcohol is injuries to health, nobody is free to trade in this
commodity. Individuals have to take license or to follow system of auction to trade
in this commodity. Revenue from licensing etc. is also included in State excise.
Otherwise government has a monopoly in this area. Revenue from this tax in a
particular State depends on whether any kind of prohibition policy is adopted in that
State or not. If State government adopts restriction policy on consumption of
alcohol, the revenue from State excise will be low. Otherwise it is expected to grow
and depends on the choice or taste of the people of that State.
Governments can levy State excise on the production and/or consumption of
liquor. The tax potential of State excise duty, therefore, depends either directly or
indirectly on the consumption of alcoholic beverages like Beer, Indian Made
Foreign Liquor (IMFL) and Country Liquor but detailed data on these variables
could not be obtained for all the covered States. Therefore, Per Capita Net State
Domestic Product has been taken as an independent variable to measure tax
potential of State excise duty, with the underlying assumption that increase in per
96
capita income would influence the habits and taste of the people and hence influence
the consumption of liquor and revenue from excise duties. The following log Linear
equation has been used to estimate tax potential of State excise duty:
Log (Excise/POP) = a + b log (PCNSDP)
Excise = Revenue from Excise Duty
Motor Vehicle Tax and Taxes on Goods & Passengers
Motor Vehicles Tax (MVT) is levied under the Indian Motor Vehicle Act, 1939
on the registration of vehicle, for obtaining driving license, transferring ownership of
vehicles, issuance of permit & certificates for the fitness of transport vehicles and
issuance of trade certificate to manufacturers and dealers. This is supplemented by
the State level Motor Vehicles Act, providing for the main item of revenue in this
group, the road tax (nomenclature varies) and additional road tax (if any). Tax rates
for basic road tax/motor vehicle tax vary from one State to another depending on the
type of vehicles (Private automobile, taxies, stage carriage, contract carriage,
heavy/light goods vehicles etc.). Usually heavy commercial vehicles (buses and
trucks) are taxed at higher rate. The tax is levied in the following categories of
vehicles (1) Two Wheelers (2) Four Wheelers (3) Buses (4) Trucks, Taxies and (5)
Other Vehicles including Tractors, Auto Rickshaws etc.
Passenger and Goods Tax (TGP) is a levy on the movement of goods and
persons from one place to another. In some States the passenger and good tax is
levied as percentage of the gross revenue from passenger fares and goods freight of
transport companies but in others, it is levied as a lump sum tax calculated on the
basis of the seating capacity of the vehicles and length of the routes for buses, and
the registered laden weight in the case of trucks. In addition, the MVT and TGP are
levied independently in some States while both these taxes have been merged
together (as one tax) in some other States. It is not possible to obtain data on the
varying actual tax bases for each State. Therefore, number of registered motor
vehicles has been taken as an explanatory variable to estimate MVT and TGP tax
potential. MVT and TGP tax potential may also be a function of State Domestic
Product from transport other than railway but parameter values of this variable
during regression was not significant and hence this variable was dropped. In view
of the same tax base, in this study the tax effort is estimated for the two taxes
97
together. The Log Linear equation has been used to estimate tax potential is given
below:
log (MVT+TGP) = a+ b1log (REGMV)
MVT= Motor Vehicle Tax
TGP= Revenue from Taxes on Goods and Passenger.
REGMV= No. of Registered Motor Vehicles.
Electricity Duty
States also get revenue from Electricity Duty. Government imposes electricity
duty on the consumption of electricity. The consumers are divided into different
categories such as Domestic Consumer, Commercial Consumer, Industrial
Consumer etc. Tax potential from electricity duty depends on category-wise
consumption of electricity but the parameter values of all above categories were not
significant. Therefore, instead of category-wise variables, total consumption of
electricity has been used as an explanatory variable to estimate tax potential of
electricity duty. The Log Linear equation to estimate tax potential is given below:
Log (Electricity Duty) = a + b log (Total Consumption of Electricity)
Other Taxes
Other Taxes include various small taxes like betting tax, receipts under the
Sugarcane (Regulation) Supply and Purchase Control Act., etc. In this study other
taxes include Entertainment Tax also. Given the miscellaneous nature of the
dependent variable and the varying tax bases, it was decided to use a suitably
general proxy independent variable, namely the per capita income of the State. The
Log Linear equation has been used to estimate tax potential of other taxes including
entertainment tax is given below:
Log (OT/POP) = a + b log (PCNSDP)
OT = Other Taxes including Entertainment Tax.
In this study taxes on profession, trade calling and employment have been
excluded from the study because the number of observations was small; not many
States were actually levying this tax during the study period.
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3.6.3 Results of the Empirical Estimation
In this section, results of the empirical exercise to estimate taxable capacity
and tax efforts of various kinds of taxes of the States are presented along with an
attempt to analyze the results on the basis of estimated taxable capacity and tax
efforts of the States for their individual taxes.
Land Revenue and Agricultural Income Tax
Tax potential of Land Revenue and Agricultural Income Tax has been
estimated together through the following equation:
Log (LR+AGR) = -3.392 + 0.763 log (NSDPa)(t- values) (-1.320) (2.927)
R square = .40 F = 8.570
Results from the above equation have been shown in Table 3.7. The results
show that in the case of Agricultural taxes, the tax effort index has a wide range
from a low of 7.69 in Punjab and 13.23 in Haryana to 460.55 in West Bengal.
Except West Bengal, Gujarat, Orissa and Maharashtra, tax effort index of all the
States are below 100 which imply that these States could not exploit this source of
revenue to its full capacity. It may be mentioned that in Haryana, Punjab and U.P.
(to a smaller degree) a substantial part of the revenue from agricultural sector is
collected through Mandi (Market) fees on sales in organized markets by surplus
farmers. These revenues, however, are not classified as taxes. In the case of West
Bengal, the soaring tax effort index has been probably due to the cesses on tea
plantations and coal mines (included in land revenue) unique to the State, which
garner a large amount of revenue.
Stamp Duty and Registration Fee
Tax potential of Stamp Duty and Registration Fee has been estimated by the
following log linear regression equation:-
Log (SDRF/POP) = 3.921 + 1.120log (URBAN) +.143log (PCNSDP)(t-values) (.837) 1.984) (.346)
+ .193log (DENSITY)(1.024)
R square = .708 F = 8.871
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Results from the above equation have been shown in Table 3.8. The results
show that Haryana, Karnataka, Rajasthan, Andhra Pradesh, Punjab, Maharashtra,
U.P. and Kerala could be regarded as eight top States in the country that put in
above average degree of effort to collect this tax whereas in the case of Bihar, Goa,
Gujarat, M.P., Orissa, Tamilnadu and West Bengal, the tax collections of these
States have been lower than their tax potentials. There was scope for these States to
raise their tax revenue by increasing their tax effort for this source of tax.
Sales Tax
A major part (approximately 70 percent of own tax revenues) of their own
tax revenue receipts in almost all States is raised through sales tax. Therefore, the
tax effort of sales tax is the main determinant of the overall tax effort of any State.
The tax potential of sales tax has been estimated by the following log linear
regression equation:-
Log (Sales tax/POP) = .459 +.275log (SCBB/POP) +.954log (PCNSDP)(t-values) (.077) (1.003) (2.666)
+.204log (URBAN)(.580)
R square = .924 F = 44.522
Results obtained from the above equation have been shown in Table 3.9. The
results show that the range of tax effort indices has not been so wide from a low of
61.83 in West Bengal to a high of 134.99 in Kerala. Most of the States (9 out of 15)
have higher actual sales tax revenue than their taxable capacity. These States were
Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Maharashtra,
Rajasthan and Tamilnadu. Orissa and U.P. were the States that were very close to
exploiting this source of revenue to its full extent whereas, some States like Goa,
M.P., Punjab and West Bengal exhibited low tax effort, and had scope to increase
their tax receipts from sales tax. Haryana was at the third position after Kerala and
Tamilnadu, but it was collecting more than its relative potential which may be taken
as an indicator of its good performance in mobilizing resources.
State Excise Duty
The tax potential of Excise Duty has been estimated through the following
log linear regression equation:-
100
Log (Excise/POP) = -5.614 + 1.106 log (PCNSDP)(t-values) (-2.159) (4.209)
R square = .596 F = 17.716
During the estimation of the regression to obtain the above equation, Gujarat
has been dropped from the list of States because of long-standing prohibition policy
in Gujarat. Even statistically, if this State is not dropped, the value of R square, F
and t statistics become insignificant. Results obtained from the above equation have
been shown in Table 3.10 which showed that the variation in tax effort was
significant, ranging from 36.02 in West Bengal to 201.02 in Karnataka. In majority
of the States, tax collection has been greater than their relative potential. In Kerala,
there was scope for the State to increase its revenue from this source but in the cases
of Bihar, Goa, Maharashtra, Orissa and West Bengal, the scope to raise revenue
from this source was much higher.
Motor Vehicle Tax (MVT) and Taxes on Goods & Passengers (TG&P)
Many State governments levy these two taxes together because both depend
on the number of registered motor vehicles in the State. The taxable capacity of
MVT and TG&P together has been estimated by following log linear equation:-
Log (MVT) = -3.098 + .646log (REGMV)(t-values) (-1.725) (5.395)
R square = .691 F = 29.106
Results obtained from this equation have been shown in Table 3.11. The
results show that Bihar, Andhra Pradesh, Haryana, Karnataka. M.P, Orissa,
Rajasthan and Tamilnadu were the States which have successfully exploited this
source of revenue to an extent greater than their relative capacity. Gujarat, Kerala
and Maharashtra were very close to the estimated relative capacity but in the cases
of Goa, Punjab, U.P and West Bengal, there was scope for these States to further
raise their tax receipts from this source.
101
Electricity Duty
The tax effort index in the case of Electricity Duty is a reflection of tax effort
as well as the timeliness of the remittance of revenue collected by the State
Electricity Boards (SEBs) – they are often tardy in remitting the same to the
government. The taxable capacity of the States for Electricity Duty has been
estimated by the following log linear equation:-
Log (Electricity Duty) = -11.315 + 1.688log (CONSUMPTION)(t-values) (-3.889) (5.637)
R square = .710 F = 31.773
Results obtained from the above equation have been shown in Table 3.12.
The results show that Gujarat, M.P, Orissa, Rajasthan and West Bengal, which were
middle and low income States, were exploiting this source of revenue more than
their potential whereas in all other States, actual revenue has been much lower than
their taxable capacities. Therefore, tax effort index of these States has been lower
than the average tax effort of all selected States taken together.
Haryana which is the State with third highest per capita income after Goa
and Delhi exploited its electricity tax potential only to the extent of 32.69 percent.
This implies that the State had considerable scope to raise its revenue collections
from this source. In many States, revenue from this source has been low due to theft
of electricity and lower user charges. Therefore, State government should take
measures to check theft of electricity and to raise user charges especially in the
agricultural sector.
Other Taxes
Tax potential of Other Taxes including Entertainment Tax has been
estimated by the following log linear regression equation:-
OT/POP = -14.267 + 1.746 log (PCNSDP)(t-values) (-4.470) (5.421)
R square = .693 F = 29.390
The results drawn from the above equation have been shown in Table 3.13.
The results show that performance of Goa, Karnataka, Kerala, M.P, Maharashtra and
West Bengal has been better than the average of all States whereas Bihar and
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Gujarat were very close to the average. But in the cases of Haryana, Orissa, Punjab,
Rajasthan, Tamilnadu and U.P., there was ample scope to raise their revenue
receipts from this source because actual revenue has been much lower than their tax
potentials.
Total Own Taxes
The aggregate tax performance of all the States for all taxes put together has
been shown in Table 3.14. In terms of aggregate tax effort, Karnataka performed the
best with an index of 127.84. Other States which seem to have done well were:
Bihar (123), M.P. (121), Orissa (120), Gujarat (118), Haryana (115), Kerala (111)
and Maharashtra (101).
In the case of Gujarat, the tax effort index may be a little overestimated
as both tax revenue and tax potential for State Excise Duty were excluded.
However, it may be argued that the tax potential of other taxes ought to be higher in
Gujarat due to prohibition and some adjustments should be made to account for this.
We have not carried out any such adjustments in the tax potential estimates. States
that exhibit low tax effort include Goa (74.14) and U.P. (74.16).
Inferences
Even comparing the low income States of Bihar, M.P. and Rajasthan with
Haryana (Table 3.15), their tax effort has been better than that of or equal to
Haryana in spite of the fact that Haryana has higher Per Capita Income. Haryana
needs to identify areas for focusing higher tax effort; our analysis shows that the
State can raise its revenue receipts from three sources, viz. Agricultural Income Tax,
Electricity Duty and Other taxes (Including Entertainment Tax) as per the cross-
State comparison of tax effort reported above.
3.6.4 Tax Effort and Taxable Capacity of Haryana (1980-81 to 2005-06): ATime Series Analysis
Haryana is one of the prosperous States of India. Per capita income of
Haryana has been relatively high among all States except Goa and Delhi. 1987-88
was the year in which Haryana saw revenue deficit for the first time. Before this
year i.e. 1987-88, the revenue account of Haryana State Government was always in
surplus. After 1987-88, revenue deficits kept increasing and the State saw revenue
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surplus once again only in 1993-94, after which revenue deficit again set in. The
State saw revenue surplus once again in its revenue account after twelve years, in the
year 2005-06.
During this long time from 1980-81 to 2005-06, the fluctuations in revenue
account balance could have been caused by changes in revenue performance,
changes in expenditure levels or both. One way of examining the inter-temporal
revenue performance would be to compare the State’s performance each year to a
norm derived from its own performance across the years. The time-series analysis of
tax performance is intended to do just that in terms of estimating taxable capacity
and tax effort of each year of observations. Being based on the regression method,
this analysis is also subject to the same caveats as applicable to the cross-section
analysis; however, if the cross-section estimates are subject to State-specific errors,
the time-series analysis avoids that. On the other hand, it could be more susceptible
to auto-regression.
3.6.5 Specifications
Land Revenue and Agricultural Income Tax
Land Revenue has been a declining source of revenue. In our time series
analysis, the two variables used to estimate tax potential are:-
a) Per Capita Income from agriculture excluding forestry, minerals, and animal
husbandry, and
b) Share of agricultural income in total income.
These two variables have been taken with the expectation that a) will explain
year to year fluctuations, while b) will take care of the long term declining trend.
Income from agricultural income tax in Haryana has been nil as it is not levied in the
State. The equation which is used to estimate land revenue potential is given below:
Land Revenue/POP = a + b1log (PCNSDPa) + b2 log (Agri. Sh.)
POP = Population of Haryana from 1980-81 to 2005-06.
PCNSDPa = Per Capita Net State Domestic Product from Agriculture excluding
forestry, minerals, and animal husbandry, and
Agri. Sh. = Share of Agricultural Income in Total Income of the State.
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Stamp Duty and Registration Fee
Stamp Duty and Registration Fee (SDRF) tax potential is estimated by the
following equation:-
Log (SDRF/POP) = a + b1log (DENSITY) + b2log (PCNSDP) + b3log (URBAN)
Since all the variables in this equation are based on decadal Census figures,
annual data series are created using intrapolation and extrapolation of the Census
data. Annual data on population are taken from Center for Monitoring Indian
Economy (CMIE) publications and data on PCNSDP from Economic and Political
Weekly Research Foundation (EPWRF) from 1980-81 to 2004-05; for the year
2005-06, the value is estimated on the basis of growth of immediately preceding
years. The series on urbanization was created by us using the same method.
Sales Tax
Sales tax potential depends on agricultural share in NSDP (expected sign of
the coefficient is negative), per capita net state domestic product at current prices,
number of scheduled commercial bank branches and urbanization. The log-linear
regression equation used to estimate sales tax potential is given below:
Log (Sales Tax/POP) = a + b1log (Agri. Sh.) + b2log (PCNSDP) + b3log
(SCBB/POP) + b4log (URBAN)
Motor Vehicle Tax and Taxes on Goods and Passengers
The State levies different rates of tax on different types of vehicles. As such,
all vehicles are divided into following categories to accommodate their varying
weights in the determination of revenue:
Two wheelers, Four wheelers (includes Tractors, Auto rickshaws, Cars and Jeeps),
number of Buses, number of Taxies and number of Other Vehicles.
The log-linear equation used to estimate tax potential is given below:
Log (MVT&TGP) = a + b1log (NO2) + b2log (NO4) + b3log (NOB) +
b4log (NOT) + b5log (NOX) + b6log (NOO)
NO2 = Number of Two Wheelers
NO4 = Number of Four Wheelers
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NOB= Number of Buses
NOT= Number of Trucks
NOX= Number of Taxies
NOO= Number of Other Vehicles
Data on the independent variables used have been taken from various issues
of Statistical Abstract of Haryana from 1980-81 to 2005-06.
Excise Duty
Excise duty depends on both production and consumption of liquor, but in
the absence of data on production and also because liquor can be imported/exported
from other States, consumption of liquor is a much better variable to estimate tax
potential. The categories of liquor used are: country liquor (CL), India-made Foreign
Liquor (IMFL) and Beer. The log linear regression equation used to estimate excise
duty is given below:
Log (Excise) = a + b1log (CL) + b2log (IMFL) + b3log (BEER)
Other Taxes
Given the mixed nature of this group, other taxes have been taken as a ratio
of GSDP and the potential measured using effective rates thus derived.
3.6.6 Estimation of Taxable Capacity
Land Revenue
Land Revenue potential has been computed using the following regression
equation estimated by us:-
Land Rev/POP = 2.364- 1.253log (PCNSDPa) - 10.421log (Agri. Sh.)(t-values) (.456) (-1.486) (-4.070)
R square =.504 F = 11.695
Results obtained from the above equation have been shown in Table 3.16.
The results show that while the State’s exploitation of this source of revenue was
above the long-term average performance during 1980-81 to 1985-86, the
government could not exploit it to its full capacity from 1986-87 to 1999-00, except
in the years 1992-93 and 1993-94. 1987-88 was the year in which its tax effort was
at the minimum (8.77 percent of potential), but in the years 2000-01, 01-02 and 03-
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04, government once again improved its tax effort for land revenue above 100
percent only to drop again in 2004-05 and 2005-06 below the potential at 84 percent
and 75 percent respectively. This shows that there was scope for the State
government to raise its revenue from Land Revenue or agricultural income tax,
which is not levied in Haryana. It is the large and surplus farmers that have potential
to pay tax on agricultural income, since they get the largest benefits from various
government policies benefiting the agricultural sectors. Economic condition of small
and marginal farmers has not been very sound as they produce primarily for their
own consumption and therefore only they should be exempt from these taxes and
user charges.
Stamp duty and Registration Fee
Stamp Duty and Registration Fee is also an important source of revenue for
the State government. Stamp Duty and Registration Fee (SDRF) potential has been
estimated using the following log linear regression equation estimated:-
Log (SDRF) = -15.213+ 2.381log (DENSITY) +.633log (PCNSDP)(t-values) (-3.129) (2.300) (3.109)
+ .340(URBAN)(.620)
R square = .988 F = 612.171
Results from the above equation have been shown in Table 3.17. When we
analyse the performance of Haryana State government in comparison of other States
in cross section analysis we find that the tax effort index of Haryana has been 164
and rank assigned was 1. Its yearly tax effort estimates for this tax ranges between
80 and 120 percent with fluctuations, which are possibly linked to the activities in
the real estate market. The State has benefited from its proximity to Delhi with
regard to this tax substantially, since a large amount of real estate activities – both
residential and commercial – have actually spilled over from Delhi into adjoining
parts of Haryana (like Gurgaon, Faridabad, Rohtak and Sonepat) boosting its SDRF
collections. This is one area where the State is likely to continue its good
performance, given the continuing and even accelerating real estate activities; all it
has to do is to facilitate such activities, ensure that no exploitation of original
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landowners takes place and the developments are orderly, and provide
complementary services like roads, water supply, sewerage, and transport.
Sales Tax
The following equation has been estimated to compute Sales tax potential:
Log (Sales tax/POP) = 9.141 -.417log (Agri.Sh.) + .812log (PCNSDP)(t-values) (2.282) (-1.991) (11.783)
-.852log (SCBB/POP)+2.003log (URBAN)(2.433) (4.070)
R square = .992 F = 621.148
Results obtained from the above equation have been shown in Table 3.18,
which shows that tax effort index has been throughout stable within a narrow range
of 90 and 130, except one year (1990-91) in which tax effort index was only 80. In
comparison of other States, in cross section analysis, tax effort index of Haryana
government was 121, and going by the time-series evidence here, the State has been
a steady performer throughout. Given the predominance of sales tax in the total tax
collection of the State, this has more or less ensured a reasonable overall tax effort.
As long as the State is able to maintain this in future, it should be in a relatively
comfortable position with respect to its finances.
State Excise Duty
Excise Duty potential is based on the following estimated equation:
log (Excise) = 3.399 + .000000005824log(CL) +.00000005987log(FL)(t-values) (31.885) (12.834) (5.211)
-0000000110log(BEER)(-.627)
R square = .982 F = 364.409
Results obtained from the above equation have been shown in Table 3.19.
Tax effort of Excise Duty varied widely from 79 in 2001-02 to 141 in 1998-99.
During 1996-97 and 1997-98, the State government fully prohibited consumption of
liquor in Haryana; therefore, these two years have been dropped when regression
was run to estimate tax potential and effort for this particular tax. Except for the
years 1980-81, 81-82, 83-84, 89-90, 90-91, 92-93, 2000-01, 2001-02, 2002-03 and
2005-06, tax effort has been more than 100 indicating the good performance of
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Haryana government in exploiting this source of tax revenue receipts. In most of the
above mentioned years also tax effort has been more than 90, which is not bad. The
average tax effort index of last three years has been 106. In the cross section analysis
it was estimated at 137.
Motor Vehicle Tax and Taxes on Good and Passengers
The following estimated equation has been used to derive tax potential of
Motor Vehicle Tax and Taxes on Goods and Passengers:-
Log (MVT) = -6.173 +.656log (NO2) +.08503log (NO4) +.107log (NOB)(t-values) (-6.990) (4.315) (.456) (2.945)
+.176(NOT)+.008145log (NOX) +.150log (NOO)(1.521) (.429) (1.427)
R square = .984 F = 184.833
Results obtained from the above equation have been shown in Table 3.20.
Tax effort Index of Motor Vehicle Tax and Taxes on Goods and Passengers was the
lowest in year 1988-89 (79) and the highest in year 2002-03 (123). Broadly
speaking, the earlier years exhibit relatively low tax effort, which improved
considerably in the last five years. In the cross section analysis too, in comparison of
other States, tax effort has been 124 which implied that the performance of Haryana
State government to exploit revenue from this source in comparison of other State
governments has been better, it may be noted that the time period of the cross-
section analysis coincides with the period when the State’s performance was better
compared to its own performance in earlier years.
Other Taxes
Other Taxes included Electricity Duty and Entertainment Tax (Table 3.21).
The tax potential of this source of revenue has been estimated by the ratio of other
taxes and NSDP. The results show that up to year 1994-95, government’s
performance has been very good but after 1994-95, except 1996-97, government’s
effort to exploit this group of revenue sources declined to 42 percent. It may be
noted that although revenue from electricity duty is not as small as from the other
elements in this group, it has been included here mainly because of the large
fluctuations in collections. Further, entertainment tax has become much less
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productive as a revenue source in the State much in the same manner as across the
country, which is primarily responsible for the declining tax effort. The government
can do relatively little to resurrect this source of revenue because this is largely the
impact of an exogenous phenomenon (decline in the movie-going habits). As such,
the State may need to think about introducing other so far unused revenue sources
(like profession tax), if it really wants to mobilize additional resources from this
group.
Total Own taxes
The tax effort index of Total Own Taxes has been estimated by the
aggregated actual revenues and aggregated estimated tax potentials which have been
shown in Table 3.22. The results show that in most of the years, the State could
exploit its aggregate own taxes more than its tax potential. During many years, it has
been below but very close to 100 also. Although the overall tax effort has generally
been good, the State government must strive to maintain this level of performance in
future also.
Inferences
On the basis of time series analysis of tax capacity and tax effort of Haryana
State for whole study period, it may be inferred that:
(1) During the entire study period for most of the major taxes, tax effort of the
State has been fairly steady with some fluctuations; the taxes that exhibit
deteriorating and low tax effort (land revenue and other taxes including
electricity duty and entertainment tax) are those with lower revenue
significance, and the trends essentially follow the same taking place across
the country in other States as well.
(2) However, as and when additional revenue mobilization assumes importance,
the State could consider either a limited agricultural income tax on large
surplus farmers or a reform of the land revenue system to generate higher
revenues from agricultural incomes. It could also consider ways of garnering
higher revenues from minor taxes like entertainment tax, and consider
introducing unutilized taxes like the profession tax.
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3.7 Non-Tax Revenues: Size, Trends and Major ComponentsTable 3.1(a) shows the contribution of non-tax revenues (other than central
transfers) to be around 20-25 percent of total revenue receipts, barring the period
1993-94 to 1997-98 when their share appear to be much higher, sometimes higher
than even own tax revenues. This, however, is an accounting artifact because gross
receipts from sales of lottery tickets were included in the non-tax revenues without
netting out the costs (which appear in the accounts on the expenditure side and
similarly inflate expenditures). Besides, there are other such self-balancing artifacts
in interest receipts relating to irrigation and the State Electricity Board. As such, the
true non-tax revenues were far smaller, probably between 15 and 20 percent of total
revenue receipts, if only actual receipts were to be counted. And the bulk of these
true non-tax revenues were from the fees/charges etc. derived from various general,
social and economic services.
As can be seen from Table 3.23, 3.23(a) and 3.23(b), economic services have
been the largest single source of non tax revenue till year 1992-93 and general
services after year 1992-93, except some years in which economic services have
been largest source of revenue once again. This is again because lottery receipts
were accounted under general services.
Road Transport and Industries mobilize bulk of the revenue under Economic
Services. Under the same category, receipts from crop husbandry, animal husbandry,
fisheries, forestry & wild life, other agricultural programmes, power, water supply
(river project) etc. followed declining trend and contributed either a marginal or nil
share in total revenue under economic services. Some of these are the areas under
economic services which have revenue potential (for example, animal husbandry,
fishing, and water supply) but are yet to be exploited as a potential source of
revenue.
There is hardly any State in India that raises much revenue from social
services and like other States, revenue from social services in Haryana also has been
very low. Bulk of revenue under social services is raised under urban development
whereas contribution of all other sources under social services has been marginal
and has even followed a declining trend.
Lower user charges for various social and economic services provided by the
State government has also been responsible for the lower contribution of own non
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tax revenue receipts in total receipts. Recoveries from various services have been
shown in Table 3.24. From 1980-81 to 2003-04, recoveries from Social Services
have been below 10 percent. During last two years of the study period, recoveries
from Social Services increased marginally to 13.68 percent and 11.26 percent
respectively. Recoveries from economic services which were above 30 percent
before 1994-95, declined after 1993-94 and always have been below 30 percent.
Recoveries from (i) Education, Art, Sports and Culture, and (ii) Health, Family
Welfare and Water Supply have been below 4 percent and 8 percent respectively and
from Irrigations recoveries always have been below 20 percent, except some years.
Contribution of interest receipts, and dividend and profits has been low and has
declined marginally with time (Table 3.23(a)).
Investment and Returns in Public Sector Undertakings (PSUs)
Government invests in public sector undertakings like Statutory
Corporations, Joint Stock Companies and Co-operatives. Government’s return on
this investment has been meager at less than 0.25 percent whereas rate of interest on
government borrowings has been more than 6 percent. In year 2005-06, investment
of government in these companies increased by 21.5 percent whereas rate of return
decreased by 31 percent. The rate of return has been lower because there have been
losses in the most of the companies and profits of other companies have been eaten
up by the losses of sick units.
“One statutory corporation and 14 government companies with an aggregate
investment of Rs. 1832.69 Cr. up to 2005-06 were incurring losses and their
accumulated losses amounted to Rs. 1504.81 Cr. as per the accounts furnished by
these companies up to 2005-06”.1
The investment and returns of government enterprises or public sector
undertakings are shown in Table 3.25. Table 3.25 shows that due to negligible rate
of return from Public Sector Undertakings, receipts from dividends and profits of the
State government have been marginal on the one hand, and interest payment burden
of borrowings (which were taken to invest in PSUs) fell on State government, on the
other hand. Thus, the poor financial results of PSUs have hurt the State’s finances on
both the revenue side as well as the expenditure side.
1 CAG (Civil), GOH, 2005,2006.
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The largest public enterprise in the State in terms of capital invested (loan
and equity) is the State Electricity Board (SEB). It is clear from Table 3.26 that cost
ineffective price policy of the SEBs and the consequent mounting losses despite
regular subsidies (and other non-transparent assistance like conversion of loans into
equity) has also been responsible for the lower receipts from the power sector.
Benefits of the exemptions given by the State governments in relation to the
consumption of electricity in agricultural sector are going only to the large farmers
since only they can use modern electrical equipments on a large scale in their fields.
Small farmers, on the other hand, do not have potential, due to lack of resources, to
install modern electrical equipments in their fields. Small farmers produce food
grain mainly for domestic consumption whereas large farmers usually have
marketable surpluses and such exemptions only reduce their cost of production and
increase profits. Since large farmers do have the ability to pay electricity bills, there
is enough scope for the State government to raise its revenue receipts by increasing
user charges especially in such cases. In addition of agricultural sector, the
government may use price discrimination policy on the basis of cost benefit criterion
for the charges of electricity from the commercial and domestic sector as well.
Interest Receipts on Loan and Advances by State Government
Government gives loans and advances to local bodies, Public Sector
Undertakings, government servants etc. The government charges nominal rate of
interest on these loans and advances whereas it pays high rates of interest on such
loans. Therefore, almost all the loans advanced by the State have had a subsidy
attached to them, which would be difficult to justify in all the cases. Interest paid,
received and difference between interest paid and received has been shown in Table
3.27.
From the analysis of individual own Non Tax Revenue Receipts, it is found
that lower interest receipts (due to higher interest rates paid and lower interest rates
received by the State government), negligible and marginal dividend and profits
(due to losses or bad performance of PSUs and SEB) and lower revenue from Social
and Economic Services (due to low user charges) in comparison to the costs have
been responsible for the lower Non Tax Revenue Receipts during the study period.
As noted earlier, receipts from General Services in the 2nd phase of the study period
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has been higher only as a result of including gross receipts from State lotteries
instead of any effort made by the government.
3.8 Central Transfers to the StatesThe framers of the Constitution well understood the fact that the prescribed
federal system will create problems of vertical and horizontal imbalances, both due
to the assignment of inelastic and inadequate sources of revenue to the States in
comparison to their expenditure needs and the converse for the central government.
Therefore, they introduced provisions for the transfer of resources from the centre to
the States.
“In a federal fiscal system, on grounds both of equity and efficiency,
resources are generally assigned more to the central government whereas States
together with the local government have bigger responsibilities. The resultant
vertical imbalances require transfer of resources from the centre to the States. States
also have different capacities and needs, and this lends a horizontal dimension to the
issue of resource sharing”.2
To remove these vertical and horizontal imbalances in India, there are three
ways in which the transfer of resources takes place from the centre to the States,3
namely,
1. Statutory transfers through Finance Commission.
2. Plan transfers through the Planning Commission.
3. Discretionary transfers for Centrally Sponsored Schemes and for different
non plan purposes by various ministries, especially the Ministry of Finance.
3.8.1 Transfers through Finance Commission (FC)
Although the Constitution provides for central transfers, it neither indicates
the size of the share of the States in the divisible taxes nor prescribes any principle
for its distribution among the States. Framers of the Constitution consciously
avoided a permanent formula in this regard in view of expected changes in the
spheres of taxation and public expenditure. “Thus, the precise manner of sharing
taxes and the actual determination of grants is left to the deliberations of the Finance
2 Rangarajan, C (2004), “Issues before the Twelfth Finance Commission”, Economic and PoliticalWeekly, Vol-XXXIX, No-26, p.2707, June.3 The regional pattern of central expenditure also could be considered as resource transfer, but in aless formal manner. In any case, it would be a major task by itself to allocate central expendituresacross States.
114
Commission which is appointed by the President (under Article 280) every
quinquennium, or earlier if necessary”.4 The Commission is required to make
recommendations on the following:
(a) The distribution between the Union and the States of the net proceeds of
shareable taxes and allocation between the States of the States’ share of
divisible taxes;
(b) The principles that should govern grants-in-aid of revenues of the States out
of the Consolidated Fund of India and the amount to be paid to the States in
need of assistance;
(c) The measures needed to augment the Consolidated Fund of a State to
supplement the resources of Panchayats (rural local governments) in the
State on the basis of recommendations made by the State Finance
Commissions;
(d) The measures needed to augment the Consolidated Fund of a State to
supplement the resources of municipalities on the basis of recommendations
by the State Finance Commissions;
(e) Any other matter referred to the commission in the interest of sound finance.
The approach of the FCs to determine transfers essentially consists of (i)
assessing the overall budgetary requirements of the Centre and States to determine
the volume of resources that can be transferred during the period of their
recommendation; (ii) forecasting States’ own current revenues and non-Plan current
expenditures; (iii) determining the States’ share in central tax revenues and
distributing them between the States based on a formula; (iv) filling the post
devolution projected gaps between non plan current expenditures and revenues with
the grants-in-aid. This is known as the “gap-filling” approach.
Tax devolution is a statutory transfer and every State gets a share in central
taxes according to the distribution criteria determined by the Finance Commission.
The main purpose of tax devolution is to supplement the resources of the States
according to their expenditure requirements. But if even after tax devolution any
4 Sury, M.M (2005), “Finance Commissions of India”, Indian Tax Foundation, New Delhi-07, FirstPublication, p.33.
115
State still needs financial assistance, Finance Commission recommends transfer in
the form of grants, only to those States that have non-Plan revenue deficit.5
3.8.2 Transfers through Planning Commission (PC)
With the establishment of the Planning Commission in 1950, the Central
Government has been using Article 282 of the Constitution for making grants to the
States for Plan projects. Ever since the launching of the First Five Year Plan, these
grants have occupied an important place in central financial transfers to the States.
The Planning Commission, which for all practical purposes is a political body,
makes an assessment of the existing resources of the individual States and the
country as a whole and sets objectives in various fields and formulates Plans for
economic development in the light of requirements of each State. The details of the
Plan Assistance are schematically presented in the diagram below.
Planning Commission (Plan Assistance)
State Plan Scheme Various
Ministries
Special Category General CategoryStates States
Share in Central Plan Assistance – 30 percent - 70 percentShare of Loan and Grants – 10: 90 - 70: 30
Central PlanSchemes
Centrally SponsoredSchemes
Special PlanSchemes
5 Finance Commissions have confined their attention to the non-Plan account only and grants arerecommended only for those States that have post-devolution non-Plan revenue deficit. If there is nonon-Plan revenue deficit, no amount is transferred under the deficit grants. However, such Statesremain eligible for ad hoc grants for specific projects/programmes.
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3.8.3 Transfers through various Ministries
In addition to the assistance to the States through the Finance Commission and
the Planning Commission, various Ministries also transfer resources to the States
under various schemes of national importance. These schemes are launched by the
Central Ministries and implemented by the State governments with central
assistance. The central ministries concerned propose and formulate these schemes
which are approved by the Planning Commission and the Central Cabinet. The
States execute these schemes under the technical guidance and supervision of the
centre which also issues guidelines regarding the contents, coverage, and
expenditure pattern and staffing of such schemes. The assistance given for these
schemes is often on a matching basis and is over and above the assistance given for
State plans; provision for these is made in the budgets of the central Ministries.
3.9 Trends of Receipts from share in Central Taxes and Grants in
Aid from Centre to Haryana State GovernmentIt has already been stated that the State receives around 15 percent (on an
average) of its total revenue receipts in the form of central transfers (shared taxes
and grants in aid). It is clear from Table 3.1(a) and 3.1(b) that during the study
period, contribution of shared taxes and grants in total revenue receipts and as a
proportion of GSDP decreased significantly over the years. The contribution of
shared taxes in total revenue receipts which has been around and above 10 percent in
most of the years of the decade of 80s, decreased after that to 5 percent. Similar
trends may be seen for grants from the centre. At the end of the study period,
transfers (shared taxes and grants in aid) from the centre increased a little due to
declining contribution of own non-tax revenue receipts instead of any increase in
transfers.
Although declining contribution of central transfers may be taken as
declining dependency of the State on the centre, it could signify a lack of State
initiative also to some extent. Central transfers may be discretionary or formula-
based. Transfers from FC in form of shared taxes are formula based and depend on
various factors as determined by FC like population, per capita income, geographical
area, index of infrastructure, tax effort, and fiscal discipline. Similarly, transfers for
State Plan Schemes are largely formula based. But other transfers from the PC and
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from FC may be discretionary to some extent. Discretionary transfers, of course, are
discretionary by definition.
For formula based transfers, the States can possibly make efforts to achieve
financial and other outcomes that could raise its share in the total, but for
discretionary transfers the State can do little other than bring to bear political
pressure on the concerned agency of the centre.
In Haryana, the level of tax effort (measured in this chapter), fiscal
discipline, infrastructure etc. which are components of formulas adopted by various
FCs to distribute shareable taxes among States, have been better than other general
category States. The State has made its full efforts to have maximum amount in form
of central transfers on the basis of its fiscal and other conditions. However, since
recent Finance Commissions have placed larger weights on determinants based on
per capita income in the interest of progressivity in the transfers, the State has
received progressively smaller amounts as central transfers.
Thus, it may be inferred from the above discussion that contribution of
central transfers has been low because of exogenous factors; the significant increase
in the contribution of State’s own tax revenue receipts in total revenue receipts may
be taken as a symbol of soundness of State finances and of a relatively better
developmental status.
3.10 Dependency of the Haryana State Government on the
Transfers from the CentreShare of transfers from the centre to the State in total receipts of the State
and in total expenditure of the State indicates the extent to which the State depends
on the centre for the funds to fulfill its expenditure requirements.
Per capita transfers (tax share and grants) to the 15 major general category
States have been shown in Table 3.28 and their ranks (highest the transfer lowest the
rank and vice-versa) have been given within parentheses.
It is clear from Table 3.28 that during VIth plan (1980-85), per capita
transfers in Haryana (at 10th rank) were more than Punjab (14th rank),
Karnataka (at 13th rank), Maharashtra (at 12th rank) and West Bengal (at 11th
rank). During 7th plan, per capita transfers to Haryana declined and its
position improved to 11th rank. After 7th plan, the State has been at 13th and
118
14th rank which implies that after 7th plan, per capita transfers to Haryana has
been the lowest in comparison to all other major general category States,
except Maharashtra and Goa.
Share of central transfers in total receipts of the State during different plans
have been shown in Table 3.29. The Table shows that revenue transfers as a
percentage of total revenue receipts of the State, loan transfers as percentage
of total capital receipts of the State and aggregate transfers as percentage of
aggregate receipts of the State declined continuously with each successive
Plan.
Share of central transfers in the expenditure is another criterion to estimate
the dependency of the State on centre. Share of central transfers to Haryana
in the expenditures of the State government have been given in Table 3.30.
Revenue transfers as a percentage of total revenue expenditure of the State
government, loan transfers as a percentage of total capital expenditure of the
State government and aggregate transfers as a percentage of aggregate
expenditure of the State government declined continuously, implying
progressively lower reliance of Haryana on the central government for funds
to finance its expenditures.
119
Table 3.1: Composition of various kinds of Revenue Receipts of the Haryana State Government (Rs. in Cr.)
Year
1 2 3=1+2 4 5 6=4+5 7=3+6Own TaxRevenue
Own NonTax Rev
Total OwnRevenue
Share inCentral Taxes
Grant fromthe Center
TotalTransfers
Total RevReceipts
1980-81 233.91 119.31 353.22 61.23 45.49 106.72 459.9481-82 290.62 137.98 428.6 68.03 39.44 107.47 536.0782-83 336.68 159.88 496.56 72.61 42.45 115.06 611.6283-84 365.87 179.54 545.41 80.78 72.4 153.18 698.5984-85 405.41 214.48 619.89 93.54 77.02 170.56 790.4585-86 501.71 258.12 759.83 85.5 115 200.5 960.3386-87 565.86 296.62 862.48 97.21 170.49 267.7 1130.1887-88 664.4 378 1042.4 107.52 153.92 261.44 1303.8488-89 795.41 354.71 1150.12 120.62 170.34 290.96 1441.0889-90 910.12 445.93 1356.05 154.11 97.08 251.19 1607.2490-91 1069.54 511.1 1580.64 185.9 146.88 332.78 1913.4291-92 1300.2 546.1 1846.3 219.45 176.04 395.49 2241.7992-93 1446.87 460.27 1907.14 261.94 208.56 470.5 2377.6493-94 1588.91 1340.55 2929.46 282.45 269.54 551.99 3481.4594-95 1887.86 3473.41 5361.27 317.14 204 521.14 5882.4195-96 2168.96 2186.81 4355.77 360.47 298.49 658.96 5014.7396-97 2143.12 3132.67 5275.79 431.89 340.65 772.54 6048.3397-98 2368.63 2631.1 4999.73 539.31 358.73 898.04 5897.7798-99 3119.62 1518.02 4637.64 480.04 361.01 841.05 5478.6999-00 3517.61 1259.06 4776.67 525.27 464.82 990.09 5766.7600-01 4311.48 1439.39 5750.87 344.88 478.14 823.02 6573.89
2001-02 4972.43 1666.07 6638.5 449.01 513.04 962.05 7600.552002-03 5549.68 1807.85 7357.53 756.59 542.9 1299.49 8657.022003-04 6348.05 2223.06 8571.11 600.75 671.63 1272.38 9843.492004-05 7440.03 2544.37 9984.4 619.5 545.16 1164.66 11149.062005-06 8527.55 2188.28 10715.83 1021.55 908.42 1929.97 12645.8
80-86 15.02 16.34 15.46 8.12 22.77 14.78 15.2986-96 15.97 27.68 21.32 16.63 7.4 11.66 19.7296-06 16.71 -0.19 10 7.02 9.78 8.26 9.7880-06 15.21 13.84 14.96 11.53 11.84 11.6 14.39Source: RBI, State Finances: A Study of Budgets, Various Issues.Note: Last four bold lines represent the Annual Average Compound Growth Rates.
120
Table 3.1(a): Share of various kinds of Revenue Receipts in Total Revenue Receipts of the State Government
Year
1 2 3=1+2 4 5 6=4+5 7=3+6Own TaxRevenue
Own NonTax Rev
Total OwnRevenue
Sh. inCentral Taxes
Grant fromthe Center
Total NonOwn Rev
Total RevReceipts
1980-81 50.86 25.94 76.8 13.31 9.89 23.2 10081-82 54.21 25.74 79.95 12.69 7.36 20.05 10082-83 55.05 26.14 81.19 11.87 6.94 18.81 10083-84 52.37 25.7 78.07 11.56 10.36 21.92 10084-85 51.29 27.13 78.42 11.83 9.74 21.57 10085-86 52.24 26.88 79.12 8.9 11.98 20.88 10086-87 50.07 26.25 76.32 8.6 15.09 23.69 10087-88 50.96 28.99 79.95 8.25 11.81 20.06 10088-89 55.2 24.61 79.81 8.37 11.82 20.19 10089-90 56.63 27.75 84.38 9.59 6.04 15.63 10090-91 55.9 26.71 82.61 9.72 7.68 17.4 10091-92 58 24.36 82.36 9.79 7.85 17.64 10092-93 60.85 19.36 80.21 11.02 8.77 19.79 10093-94 45.64 38.51 84.15 8.11 7.74 15.85 10094-95 32.09 59.05 91.14 5.39 3.47 8.86 10095-96 43.25 43.61 86.86 7.19 5.95 13.14 10096-97 35.43 51.79 87.22 7.14 5.63 12.77 10097-98 40.16 44.61 84.77 9.14 6.08 15.22 10098-99 56.94 27.71 84.65 8.76 6.59 15.35 10099-00 61 21.83 82.83 9.11 8.06 17.17 10000-01 65.58 21.9 87.48 5.25 7.27 12.52 100
2001-02 65.42 21.92 87.34 5.91 6.75 12.66 1002002-03 64.11 20.88 84.99 8.74 6.27 15.01 1002003-04 64.49 22.58 87.07 6.1 6.82 12.92 1002004-05 66.73 22.82 89.55 5.56 4.89 10.45 1002005-06 67.43 17.3 84.73 8.08 7.18 15.26 100
Source: RBI, State Finances: A Study of Budgets, Various Issues.
121
Table 3.1(b): Composition of various kinds of Revenue Receipts of the State Government as a percentage of GSDP
YearOwn TaxRevenue
Own NonTax Rev
Total OwnRevenue
Share inCentral Taxes
Grant fromthe Center
Total NonOwn Rev
Total RevRec.
1980-81 6.4 3.3 9.7 1.7 1.2 2.9 12.681-82 6.9 3.3 10.2 1.6 0.9 2.5 12.782-83 7.0 3.3 10.3 1.5 0.9 2.4 12.683-84 6.9 3.4 10.3 1.5 1.4 2.9 13.284-85 7.0 3.7 10.7 1.6 1.3 2.9 13.685-86 7.1 3.7 10.8 1.2 1.6 2.8 13.686-87 7.6 4.0 11.6 1.3 2.3 3.6 15.287-88 8.0 4.5 12.5 1.3 1.8 3.1 15.688-89 7.4 3.3 10.6 1.1 1.6 2.7 13.389-90 7.6 3.7 11.3 1.3 0.8 2.1 13.490-91 7.3 3.5 10.7 1.3 1.0 2.3 13.091-92 7.4 3.1 10.5 1.2 1.0 2.2 12.792-93 7.7 2.5 10.2 1.4 1.1 2.5 12.793-94 7.2 6.1 13.2 1.3 1.2 2.5 15.794-95 7.2 13.2 20.4 1.2 0.8 2.0 22.495-96 7.3 7.3 14.6 1.2 1.0 2.2 16.896-97 6.0 8.8 14.8 1.2 1.0 2.2 17.097-98 6.1 6.8 12.9 1.4 0.9 2.3 15.398-99 7.1 3.5 10.6 1.1 0.8 1.9 12.699-00 7.2 2.6 9.8 1.1 1.0 2.0 11.800-01 7.8 2.6 10.5 0.6 0.9 1.5 12.0
2001-02 8.2 2.8 11.0 0.7 0.8 1.6 12.62002-03 8.4 2.7 11.1 1.1 0.8 2.0 13.12003-04 8.6 3.0 11.6 0.8 0.9 1.7 13.32004-05 9.0 3.1 12.0 0.7 0.7 1.4 13.42005-06 9.8 2.6 12.4 1.3 1.2 2.5 14.9
Source: Calculated by using data from (i) RBI, State Finances: A Study of Budgets, Various Issues, and(ii) Economic and Political Weekly Research Foundation (EPWRF), Domestic Product of Statesof India, Vol-1(2003) & Vol-2(2006).
122
Table 3.2: Revenue Receipts of States in India as a percentage of GSDP
StatesAndhra.
Pr Bihar Goa Gujarat HaryanaKar
nataka Kerala M.PMaha
rashtra Orissa PunjabRajasthan T.N U.P W.B
80-81 14.5 12.7 - 12.7 12.6 14.3 12.8 12.5 11.9 16.0 11.6 14.1 14.3 11.1 9.881-82 13.8 12.8 - 11.5 12.7 15.1 15.8 13.4 12.3 13.8 11.8 13.6 13.4 12.1 9.882-83 14.2 13.0 - 12.5 12.6 14.9 12.9 13.2 13.5 17.2 12.2 14.0 15.1 11.8 9.883-84 14.6 13.0 - 11.3 13.2 14.4 12.7 13.4 13.4 13.1 12.3 12.6 15.2 11.0 9.384-85 15.9 13.1 - 12.2 13.6 15.0 13.8 13.1 13.9 13.8 11.4 13.4 14.7 11.8 9.385-86 17.1 15.9 - 12.5 13.6 16.2 15.6 13.4 13.7 13.2 12.6 14.8 15.2 12.7 11.486-87 17.5 15.3 20.8 12.2 15.2 16.0 15.1 15.1 15.1 15.8 12.7 15.7 14.8 12.4 11.287-88 16.7 15.1 17.7 15.8 15.6 15.7 14.2 13.9 14.3 16.8 11.8 17.3 13.5 14.1 10.888-89 16.3 15.6 20.2 13.8 13.3 15.6 15.2 13.7 13.5 15.4 11.8 14.0 13.6 12.5 11.489-90 14.9 16.4 18.0 13.3 13.4 15.4 14.3 13.6 13.1 15.1 10.9 14.6 14.1 12.8 10.690-91 15.1 15.5 21.1 11.1 13.0 15.6 14.6 12.8 13.1 19.0 10.7 15.2 14.6 13.6 10.991-92 14.5 15.6 19.5 14.0 12.7 14.8 13.9 14.1 12.9 16.7 16.7 15.5 16.5 13.6 10.792-93 15.0 17.7 19.4 13.4 12.7 15.3 14.2 15.1 11.5 18.4 10.9 15.6 14.7 15.0 11.293-94 14.3 29.1 19.4 14.3 15.7 15.4 14.9 18.6 11.5 17.3 10.8 17.0 14.0 15.1 11.194-95 12.7 26.2 18.8 12.3 22.4 14.5 14.6 18.0 11.6 16.1 15.5 15.2 13.4 14.2 11.195-96 12.4 30.1 24.6 11.9 16.8 15.2 14.0 18.1 10.5 14.3 13.4 16.1 13.6 14.3 10.096-97 12.4 24.7 20.4 11.3 17.0 14.8 13.8 18.2 10.7 16.2 12.6 13.1 13.4 12.5 10.097-98 14.5 25.8 22.5 12.2 15.3 14.5 14.4 18.7 10.4 14.4 13.0 13.1 13.1 12.8 9.298-99 12.4 23.8 18.9 12.1 12.6 12.8 12.8 16.4 10.4 12.8 10.3 11.7 12.1 11.3 8.199-00 13.4 29.8 18.2 12.8 11.8 13.6 12.7 16.9 10.4 15.2 12.2 12.5 12.9 13.0 8.100-01 13.9 24.2 19.3 14.5 12.0 14.2 12.5 18.5 12.4 17.8 14.2 15.7 13.0 14.3 10.4
2001-02 14.4 21.7 23.2 13.2 12.6 14.1 12.5 13.2 11.3 16.8 12.6 13.8 13.1 14.1 9.42002-03 14.1 21.8 19.8 12.5 13.1 13.6 13.1 16.4 10.4 19.2 15.0 15.5 13.4 14.1 8.82003-04 14.6 25.9 16.8 11.0 13.3 16.0 13.2 14.6 10.5 17.4 15.0 14.7 14.1 14.7 8.92004-05 14.2 27.5 18.0 11.3 13.4 17.9 13.4 19.2 11.0 20.0 15.6 16.1 15.1 16.0 9.62005-06 15.4 29.4 20.6 12.9 14.9 17.9 13.5 18.9 11.5 22.2 17.6 17.0 16.0 17.6 10.3
Source: Calculated by using data from (i) RBI, State Finances: A Study of Budgets, Various Issues, and (ii) Economic and PoliticalWeekly Research Foundation (EPWRF), Domestic Product of States of India, Vol-1(2003) & Vol-2(2006).
123
Table 3.2 (a): Own Tax Revenue Receipts of States as a percentage of GSDP
StatesAndhra.
Pr Bihar Goa Gujarat HaryanaKar
nataka Kerala M.PMaha
rashtra Orissa PunjabRajasthan T.N U.P W.B
80-81 6.7 3.6 – 6.6 6.4 7.1 6.7 4.2 6.6 3.4 7.1 4.3 7.1 3.8 4.681-82 6.6 3.7 – 6.5 6.9 7.9 6.9 4.8 7.2 3.7 7.5 4.9 7.8 4.4 4.982-83 7.0 3.7 – 7.1 7.0 7.8 7.0 4.9 7.9 3.7 7.6 5.4 9.1 4.3 4.583-84 7.2 3.8 – 6.4 6.9 7.4 6.6 4.8 7.5 3.4 7.6 4.9 8.9 4.1 4.784-85 8.1 3.4 – 6.8 7.0 7.8 7.6 5.1 7.5 3.8 7.0 5.3 8.6 4.3 4.985-86 8.9 3.8 – 7.0 7.1 8.7 8.3 5.1 7.8 4.0 7.2 5.6 8.9 4.2 5.586-87 9.0 3.8 7.4 7.2 7.6 8.5 8.2 5.7 8.5 4.4 7.9 5.7 9.1 4.5 5.487-88 8.7 4.1 5.6 8.6 8.0 8.7 8.3 5.2 8.3 4.9 7.7 6.1 7.7 5.3 5.488-89 8.1 3.7 5.9 8.0 7.4 8.9 8.5 5.3 8.2 4.4 7.6 5.3 7.8 4.6 5.989-90 7.9 3.9 5.8 8.0 7.6 8.9 8.6 5.5 7.7 4.6 7.4 5.9 8.3 4.7 5.990-91 7.5 4.1 6.3 7.9 7.3 9.3 8.1 4.9 7.7 5.9 7.0 5.1 9.0 5.2 5.791-92 7.1 4.2 6.9 8.7 7.4 9.0 8.2 5.6 7.9 4.6 6.9 5.8 9.1 4.9 5.692-93 7.2 4.6 7.2 7.9 7.7 8.7 8.1 5.5 7.0 4.8 6.9 5.5 8.7 5.0 5.693-94 6.6 7.7 7.8 8.0 7.2 9.3 8.9 7.1 6.8 4.6 7.1 5.9 8.3 5.1 5.594-95 6.1 7.1 8.0 7.5 7.2 9.0 8.8 6.8 7.3 4.2 7.6 5.6 8.5 5.2 6.095-96 5.2 8.1 8.2 7.4 7.3 9.4 8.7 7.4 6.9 4.2 6.9 5.8 9.1 5.1 5.696-97 5.4 6.9 7.6 7.1 6.0 8.8 8.8 7.5 6.5 5.1 6.2 5.4 8.9 4.9 5.297-98 7.4 7.1 7.4 7.2 6.1 8.8 9.1 7.6 7.0 4.4 6.3 5.6 8.4 5.1 4.698-99 6.9 6.8 5.9 7.2 7.1 7.9 8.3 7.4 6.8 4.2 5.9 5.4 8.1 5.1 4.199-00 7.2 8.6 6.8 7.5 7.2 8.2 8.3 7.4 7.1 4.4 6.5 5.8 8.6 5.7 4.000-01 7.5 6.2 6.7 8.3 7.8 8.6 8.4 7.7 8.3 5.6 7.4 6.7 8.7 6.3 4.2
2001-02 8.3 5.2 7.1 7.6 8.2 9.1 8.2 5.6 8.0 5.9 6.8 6.4 9.1 5.7 4.22002-03 7.7 5.2 6.5 6.8 8.4 8.8 9.0 7.6 7.6 6.5 7.7 7.4 9.2 6.5 4.32003-04 7.5 6.4 7.4 6.7 8.6 9.7 9.0 6.9 7.7 6.1 7.6 6.9 9.5 6.3 4.72004-05 8.0 5.8 8.5 7.2 9.0 10.8 8.9 7.5 8.2 7.0 7.9 7.6 10.2 6.7 4.82005-06 8.5 5.9 10.4 8.1 9.7 11.0 8.7 8.4 8.0 7.9 9.3 8.1 11.0 7.3 4.5
Source: Calculated by using data from (i) RBI, State Finances: A Study of Budgets, Various Issues, and (ii) Economic and PoliticalWeekly Research Foundation (EPWRF), Domestic Product of States of India, Vol-1(2003) & Vol-2(2006).
124
Table 3.3: Sources and Distribution of Own Tax Revenue Receipts of the Haryana Government (Rs. in Cr.)
YearLand
Revenue SDRF
Total incomefrom
Property &Capital
StateExciseDuty
SalesTax
Taxeson
Vehicles
Goods&
Passengers
Taxeson
Electricity
EntertainmentTax
OtherTaxes
Total Taxon
Commodities& Services
TotalOwn
Tax Rev1980-81 3.93 18.35 24.28 42.98 106 9.73 32.94 14.04 5.92 0 211.61 233.91
81-82 3.64 25.37 30.01 51.99 138.37 10.75 39.65 12.7 7.29 0.85 261.6 290.6282-83 3.38 25.18 28.56 61.91 160.48 11.54 46.26 19.77 8.16 0 308.12 336.6883-84 3.76 28.08 31.84 68.4 167.46 12.65 51.34 26.19 7.99 0 334.03 365.8784-85 3.95 32.1 36.05 90.52 183.86 14.16 54.83 17.45 7.6 0.94 369.36 405.4185-86 3.79 37.39 41.18 110.96 234.35 15.01 66.16 22.4 7.99 3.66 460.53 501.7186-87 2.33 45.68 48.01 132.74 256.24 15.57 73.31 27.21 9.03 3.75 517.85 565.8687-88 0.53 50.23 49.76 158.54 314.93 16.25 80.64 27.67 9.01 6.61 613.65 664.488-89 0.73 70.71 71.44 192.87 370.56 19.11 94.46 33.36 8.17 5.44 723.97 795.4189-90 0.73 92.55 93.28 236.68 415.18 21.39 100.87 29.43 7.97 5.32 816.84 910.1290-91 0.94 101.5 102.44 286.35 494.7 35.78 102.1 34.36 7.83 5.98 967.1 1069.5491-92 1.09 97.72 98.81 341.87 620.3 68.47 119.82 38.49 8.27 4.17 1201.39 1300.292-93 1.35 104.72 106.07 393.84 676.41 71.15 141.02 43.43 8.8 6.15 1340.8 1446.8793-94 1.35 119.64 120.99 431.76 768.51 52.17 161.52 39.06 8.51 6.39 1467.92 1588.9194-95 1.34 163.81 165.15 529.35 890.08 45.58 194.8 48 9.52 5.38 1732.71 1887.8695-96 1.31 244.63 245.94 552.96 1055.41 52.82 201.16 46.46 0 14.21 1923.02 2168.9696-97 2.43 273.1 275.53 64.13 1380.07 61.59 259.64 35.48 2.29 64.39 1868.29 2143.1297-98 3.93 301.67 305.6 49.63 1552.69 67.11 331.21 40.53 13.05 8.81 2063.03 2368.6398-99 3.88 294.54 298.42 774.63 1599.38 71.39 315.81 44.53 11.94 3.52 2821.2 3119.6299-00 4.29 309.92 314.21 765.36 1967.38 84.77 323.85 46.08 10.76 5.2 3203.4 3517.6100-01 11.73 419.24 431.9 840.56 2573.39 85.69 366.66 0.68 9.62 2.98 3879.58 4311.48
2001-02 19.29 488.29 508.82 875.39 2944.81 103.63 498.56 29.48 7.99 3.75 4463.61 4972.432002-03 9.87 541.39 551.26 878.72 3337.43 114.39 652.75 0.87 5.46 8.8 4998.42 5549.682003-04 20.01 695.63 715.64 923.28 3838 132.39 660.36 59.06 9.77 9.55 5632.41 6348.052004-05 11.7 726.58 738.28 1013.16 4760.91 140.41 705.16 61.74 9.15 11.21 6698.14 7440.032005-06 11.95 950 961.95 1135 5521 150 680 59.1 14 6.5 7565.6 8527.551980-86 0.49 13.31 11.55 20.43 14.9 9.22 13.93 10.74 4.69 134.4 15.37 15.021986-96 3.94 17.31 17.02 17.79 16.61 18.31 12.28 6.73 -30.62 7.17 15.85 15.971996-06 22.27 15.3 15.41 34.01 17.37 11.09 12.92 0.49 6.63 -7.10 16.9 16.721980-06 7.44 16.84 16.28 12.63 16.93 12.25 13.35 0.15 -0.18 20.23 15.09 15.21
Source: RBI, State Finances: A Study of Budgets, Various Issues.Note: Last four bold lines represent the Annual Average Compound Growth Rates.
125
Table 3.3(a): Share of various kinds of Own Tax Revenues Receipts in Total Own Tax Revenue Receipts of GoH
Year
LandRev
-enue
Stamp &Regis-
trationFee
Total incomefrom
Property &Capital
StateExciseDuty
SalesTax
Taxeson
Vehicles
Goods&
Passengers
Taxeson
Electricity
EntertainmentTax
OtherTaxes
Total Taxon
Commodities
& Services
TotalOwn
Tax Rev1980-81 1.68 7.84 9.53 18.37 45.32 4.16 14.08 6.00 2.53 0.00 90.47 100
81-82 1.25 8.73 9.99 17.89 47.61 3.70 13.64 4.37 2.51 0.29 90.01 10082-83 1.00 7.48 8.48 18.39 47.67 3.43 13.74 5.87 2.42 0.00 91.52 10083-84 1.03 7.67 8.70 18.70 45.77 3.46 14.03 7.16 2.18 0.00 91.30 10084-85 0.97 7.92 8.89 22.33 45.35 3.49 13.52 4.30 1.87 0.23 91.11 10085-86 0.76 7.45 8.21 22.12 46.71 2.99 13.19 4.46 1.59 0.73 91.79 10086-87 0.41 8.07 8.48 23.46 45.28 2.75 12.96 4.81 1.60 0.66 91.52 10087-88 0.08 7.56 7.64 23.86 47.40 2.45 12.14 4.16 1.36 0.99 92.36 10088-89 0.09 8.89 8.98 24.25 46.59 2.40 11.88 4.19 1.03 0.68 91.02 10089-90 0.08 10.17 10.25 26.01 45.62 2.35 11.08 3.23 0.88 0.58 89.75 10090-91 0.09 9.49 9.58 26.77 46.25 3.35 9.55 3.21 0.73 0.56 90.42 10091-92 0.08 7.52 7.60 26.29 47.71 5.27 9.22 2.96 0.64 0.32 92.40 10092-93 0.09 7.24 7.33 27.22 46.75 4.92 9.75 3.00 0.61 0.43 92.67 10093-94 0.08 7.53 7.61 27.17 48.37 3.28 10.17 2.46 0.54 0.40 92.39 10094-95 0.07 8.68 8.75 28.04 47.15 2.41 10.32 2.54 0.50 0.28 91.25 10095-96 0.06 11.28 11.34 25.49 48.66 2.44 9.27 2.14 0.00 0.66 88.66 10096-97 0.11 12.74 12.86 2.99 64.40 2.87 12.12 1.66 0.11 3.00 87.14 10097-98 0.17 12.74 12.90 2.10 65.55 2.83 13.98 1.71 0.55 0.37 87.10 10098-99 0.12 9.44 9.57 24.83 51.27 2.29 10.12 1.43 0.38 0.11 90.43 10099-00 0.12 8.81 8.93 21.76 55.93 2.41 9.21 1.31 0.31 0.15 91.07 10000-01 0.27 9.72 10.02 19.50 59.69 1.99 8.50 0.02 0.22 0.07 89.98 100
2001-02 0.39 9.82 10.23 17.60 59.22 2.08 10.03 0.59 0.16 0.08 89.77 1002002-03 0.18 9.76 9.93 15.83 60.14 2.06 11.76 0.02 0.10 0.16 90.07 1002003-04 0.32 10.96 11.27 14.54 60.46 2.09 10.40 0.93 0.15 0.15 88.73 1002004-05 0.16 9.77 9.92 13.62 63.99 1.89 9.48 0.83 0.12 0.15 90.08 1002005-06 0.14 11.14 11.28 13.31 64.74 1.76 7.97 0.69 0.16 0.08 88.72 100Source: RBI, State Finances: A Study of Budgets, Various Issues.
126
Table 3.3(b): Sources and Distribution of Own Tax Revenue Receipts of Haryana Government as a percentage of GSDP
Year
LandRev
-enue
Stamp &Regis-
trationFee
Total incomefrom
Property &Capital
StateExciseDuty
SalesTax
Taxeson
Vehicles
Goods&
Passengers
Taxeson
Electricity
EntertainmentTax
OtherTaxes
Total Taxon
Commodities
& Services
TotalOwn
Tax Rev1980-81 0.11 0.50 0.66 1.18 2.90 0.27 0.90 0.38 0.16 0.00 5.79 6.40
81-82 0.09 0.60 0.71 1.23 3.28 0.25 0.94 0.30 0.17 0.02 6.20 6.8982-83 0.07 0.52 0.59 1.28 3.32 0.24 0.96 0.41 0.17 0.00 6.37 6.9683-84 0.07 0.53 0.60 1.30 3.18 0.24 0.97 0.50 0.15 0.00 6.33 6.9484-85 0.07 0.55 0.62 1.56 3.17 0.24 0.94 0.30 0.13 0.02 6.36 6.9885-86 0.05 0.53 0.58 1.57 3.32 0.21 0.94 0.32 0.11 0.05 6.52 7.1086-87 0.03 0.61 0.65 1.79 3.45 0.21 0.99 0.37 0.12 0.05 6.97 7.6287-88 0.01 0.60 0.60 1.90 3.77 0.19 0.97 0.33 0.11 0.08 7.35 7.9688-89 0.01 0.65 0.66 1.79 3.43 0.18 0.87 0.31 0.08 0.05 6.70 7.3689-90 0.01 0.77 0.78 1.97 3.45 0.18 0.84 0.24 0.07 0.04 6.79 7.5790-91 0.01 0.69 0.70 1.95 3.36 0.24 0.69 0.23 0.05 0.04 6.58 7.2791-92 0.01 0.55 0.56 1.94 3.52 0.39 0.68 0.22 0.05 0.02 6.82 7.3892-93 0.01 0.56 0.57 2.11 3.62 0.38 0.75 0.23 0.05 0.03 7.17 7.7493-94 0.01 0.54 0.55 1.95 3.47 0.24 0.73 0.18 0.04 0.03 6.63 7.1894-95 0.01 0.62 0.63 2.02 3.39 0.17 0.74 0.18 0.04 0.02 6.60 7.1995-96 0.00 0.82 0.83 1.86 3.54 0.18 0.68 0.16 0.00 0.05 6.46 7.2896-97 0.01 0.77 0.77 0.18 3.87 0.17 0.73 0.10 0.01 0.18 5.24 6.0197-98 0.01 0.78 0.79 0.13 4.02 0.17 0.86 0.10 0.03 0.02 5.34 6.1398-99 0.01 0.67 0.68 1.77 3.66 0.16 0.72 0.10 0.03 0.01 6.46 7.1599-00 0.01 0.63 0.64 1.56 4.02 0.17 0.66 0.09 0.02 0.01 6.55 7.1900-01 0.02 0.76 0.79 1.53 4.68 0.16 0.67 0.00 0.02 0.01 7.05 7.84
2001-02 0.03 0.81 0.84 1.45 4.86 0.17 0.82 0.05 0.01 0.01 7.37 8.212002-03 0.01 0.82 0.83 1.33 5.04 0.17 0.99 0.00 0.01 0.01 7.55 8.392003-04 0.03 0.94 0.97 1.25 5.19 0.18 0.89 0.08 0.01 0.01 7.62 8.582004-05 0.01 0.88 0.89 1.22 5.74 0.17 0.85 0.07 0.01 0.01 8.07 8.962005-06 0.01 1.02 1.03 1.22 5.93 0.16 0.73 0.06 0.02 0.01 8.12 9.15Source: Calculated by using data from (i) RBI, State Finances: A Study of Budgets, Various Issues, and (ii) Economic and
Political Weekly Research Foundation (EPWRF), Domestic Product of States of India, Vol-1(2003) & Vol-2(2006).
127
Table 3.4: Buoyancy Co-efficient of Own Taxes in Haryana
Own Taxes
1986-87 to 1995-96 1996-97 to 2005-06 1980-81 to 2005-06
Buoyancy R-Square t- value F- value BuoyancyR-
Squaret-
value F- value BuoyancyR-
Squaret-
value F- valueSale Tax 0.986 0.995 39.575 1566.186 1.497 0.99 27.58 760.653 1.161 0.993 59.081 3490.561Taxes onGoods andPassengers 0.737 0.963 14.411 207.676 1.123 0.893 8.158 66.555 0.928 0.985 39.098 1528.636Excise Duty 1.054 0.992 31.38 984.73 2.759 0.582 3.336 11.128 0.875 0.655 6.748 45.541Electricity Duty 0.42 0.906 8.759 76.725 0.032 0 0.017 0 0.02 0 0.091 0.008Taxes onVehicles 1.089 0.741 4.784 22.889 0.981 0.983 21.539 21.539 0.864 0.95 21.441 459.729EntertainmentTax -3.021 0.247 -1.622 2.63 0.457 0.103 0.956 0.956 -0.07 0.002 -0.197 0.039Other Taxes 0.418 0.305 1.873 3.509 -0.694 0.066 -0.75 -0.75 0.471 0.264 2.744 7.531Total Tax onCommoditiesand Services 0.945 0.995 39.225 1538.613 1.461 0.99 27.635 27.635 1.043 0.992 54.592 2980.275Land Revenue 0.243 0.073 0.796 0.633 1.878 0.674 4.063 4.063 0.509 0.256 2.875 8.264Stamp Duty andRegistrationFee 1.027 0.924 9.857 97.151 1.329 0.955 13.039 13.039 1.158 0.99 49.868 2486.836Total tax fromproperty andcapital 1.011 0.924 9.845 96.927 1.338 0.956 13.155 13.155 1.121 0.989 45.592 2078.619Total OwnTaxes 0.952 0.997 49.949 2494.928 1.445 0.994 36.554 36.554 1.051 0.993 59.972 3596.625
Source: Calculated by using data from (i) RBI, State Finances: A Study of Budgets, Various Issues, and (ii) Economic and Political WeeklyResearch Foundation (EPWRF), Domestic Product of States of India, Vol-1(2003) & Vol-2(2006).
128
Table 3.5: Elasticity Co-efficient of Own Taxes in Haryana
Own Taxes
1986-87 to 1995-96 1996-97 to 2005-06 1980-81 to 2005-06
Elasticity R-Square t- value F- value ElasticityR-
Squaret-
value F- value ElasticityR-
Squaret-
value F- valueSale Tax 0.966 0.995 40.835 1667.482 1.497 0.99 27.58 760.653 1.087 0.985 39.879 1590.309Taxes onGoods andPassengers 0.737 0.963 14.411 207.676 1.123 0.893 8.158 66.555 0.879 0.976 31.399 985.91Excise Duty 1.054 0.992 31.38 984.73 2.759 0.582 3.336 11.128 0.85 0.645 6.602 43.586Electricity Duty 0.42 0.906 8.759 76.725 0.032 0 0.017 0 -0.066 0.004 -0.307 0.095Taxes onVehicles 1.089 0.741 4.784 22.889 0.981 0.983 21.539 21.539 0.864 0.95 21.441 459.729EntertainmentTax -3.021 0.247 -1.622 2.63 0.457 0.103 0.956 0.956 -0.07 0.002 -0.197 0.039Other Taxes 0.418 0.305 1.873 3.509 -1.443 0.25 -1.64 2.691 0.3111 0.119 1.683 2.832Total Tax onCommoditiesand Services 0.938 0.995 38.869 1510.832 1.46 0.99 27.606 762.108 0.98 0.989 45.841 2101.387Land Revenue 0.243 0.073 0.796 0.633 1.878 0.674 4.063 4.063 0.509 0.256 2.875 8.264Stamp DutyandRegistrationFee 1.027 0.924 9.857 97.151 1.329 0.955 13.039 13.039 1.158 0.99 49.868 2486.836Total tax fromproperty andcapital 1.011 0.924 9.845 96.927 1.338 0.956 13.155 13.155 1.121 0.989 45.592 2078.619Total OwnTaxes 0.947 0.997 51.376 2639.514 1.444 0.994 36.519 1333.617 0.996 0.991 51.062 2607.339
Source: Calculated by using data from (i) RBI, State Finances: A Study of Budgets, Various Issues, and (ii) Economic and Political WeeklyResearch Foundation (EPWRF), Domestic Product of States of India, Vol-1(2003) & Vol-2(2006).
129
Table 3.6 Haryana Government's Efforts to raise Tax Revenue Receipts(difference between Buoyancies and Elasticities)
Own Taxes1986-87 to1995-96
1996-97 to2005-06
1980-81 to2005-06
Sale Tax 0.02 0 0.074Taxes on Goods and Passengers 0 0 0.049Excise Duty 0 0 0.025Electricity Duty 0 0 0.086Taxes on Vehicles 0 0 0Entertainment Tax 0 0 0Other Taxes 0 0.749 0.1599Total Tax on Commodities and Services 0.007 0.001 0.063Land Revenue 0 0 0Stamp Duty and Registration Fee 0 0 0Total tax from property and capital 0 0 0Total Own Taxes 0.005 0.001 0.055
Source: Calculated by using data from (i) RBI, State Finances: A Study ofBudgets, Various Issues, and (ii) Economic and Political Weekly ResearchFoundation (EPWRF), Domestic Product of States of India, Vol-1(2003) &Vol-2(2006).
130
Table: 3.7Tax Effort of Selected States : Land Revenue and Agriculture Income Tax
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 51.43 105.75 25.58 13Bihar 54.87 56.75 50.85 9Goa 4.4 3.82 60.66 6
Gujarat 152.3 70.14 114.2 4Haryana 13.87 55.12 13.23 14
Karnataka 83.33 64.02 68.26 5Kerala 47.65 44.08 56.85 7
Madhya Pradesh 43.6 74.00 30.99 12Maharashtra 369.2 96.05 202.15 2
Orissa 105.7 48.66 114.25 3Punjab 11.9 81.40 7.69 15
Rajasthan 66.1 66.02 52.65 8Tamil Nadu 33.79 55.68 31.91 10
Uttar Pradesh 94.77 156.86 31.77 11West Bengal 929.69 106.17 460.55 1
All States 2062.6 1084.72 100 -Source: Calculated
Table: 3.8Tax Effort of Selected States : Stamp Duty and Registration Fee
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 153.05 145.03 101.31 8Bihar 52.58 51.16 98.66 9Goa 225.82 346.47 62.57 14
Gujarat 160.34 209.31 73.54 11Haryana 309.55 180.34 164.77 1
Karnataka 266.84 185.72 137.92 2Kerala 189.65 172.78 105.37 6
Madhya Pradesh 107.06 122.27 84.05 10Maharashtra 354.18 255.14 133.26 4
Orissa 44.10 66.34 63.81 13Punjab 308.43 214.95 137.74 3
Rajasthan 114.75 104.9 105.01 7Tamil Nadu 213.65 279.91 73.27 12
Uttar Pradesh 141.54 115.53 117.61 5West Bengal 104.83 186.31 54.01 15
All States 2746.37 2636.16 100 -Source: Calculated
131
Table: 3.9Tax Effort of Selected States : Sales Tax
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 1248.73 1077.05 115.61 4Bihar 221.40 219.24 100.70 8Goa 3731.88 4528.95 82.17 14
Gujarat 1429.50 1403.38 101.57 7Haryana 1881.70 1534.50 122.28 3
Karnataka 1313.31 1239.49 105.66 5Kerala 1888.08 1394.77 134.99 1
Madhya Pradesh 558.51 643.08 86.60 12Maharashtra 1638.86 1579.70 103.45 6
Orissa 538.03 541.31 99.11 10Punjab 1395.35 1686.07 82.52 13
Rajasthan 720.91 714.24 100.62 9Tamil Nadu 1794.20 1357.84 131.76 2
Uttar Pradesh 475.26 485.17 97.68 11West Bengal 612.75 988.27 61.83 15
All States 19448.45 19393.03 100 -Source: Calculated
Table: 3.10Tax Effort of Selected States : State Excise Duty
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 256.6 222.28 115.27 8Bihar 32.23 50.77 63.41 11Goa 385.11 686.5 56.04 13
Gujarat - - - -Haryana 443.80 322.39 137.51 5
Karnataka 456.24 226.71 201.02 1Kerala 216.28 263.99 81.81 9
Madhya Pradesh 175.02 130.46 134.01 7Maharashtra 223.03 317.76 70.11 10
Orissa 73.28 119.92 61.04 12Punjab 599.14 309.08 193.63 2
Rajasthan 211.28 150.06 140.64 4Tamil Nadu 337.56 251.25 134.21 6
Uttar Pradesh 154.71 104.23 148.26 3West Bengal 77.27 214.28 36.02 14
All States 3641.36 3369.67 100 -Source: Calculated
132
Table: 3.11Tax Effort of Selected States : Motor Vehicle Tax and Taxes on Goods & Passengers
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 1099 1050.78 101.18 8Bihar 524.18 291.76 173.81 1Goa 107.03 191.42 54.10 14
Gujarat 1049.47 1204.08 84.31 10Haryana 801.83 622.44 124.62 4
Karnataka 1465.17 828.31 171.12 2Kerala 569.87 659.75 83.56 11
Madhya Pradesh 860.83 805.75 103.35 7Maharashtra 1409.63 1402.52 97.23 9
Orissa 650.2 446.88 140.75 3Punjab 412.2 766.91 52.00 15
Rajasthan 930.83 809.89 111.19 5Tamil Nadu 1519.63 1361.04 108.01 6
Uttar Pradesh 770.27 1134.13 65.70 13West Bengal 437.97 621.57 68.16 2
All States 12608.11 12197.22 100 -Source: Calculated
Table: 3.12Tax Effort of Selected States : Electricity Duty
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 128.8 564.22 19.25 14Bihar 10.03 13.48 62.77 10Goa 0 3.60 0 15
Gujarat 1601.7 611.41 220.96 3Haryana 40.57 104.66 32.69 12
Karnataka 261.03 288.43 76.34 8Kerala 130.73 59.05 186.73 4
Madhya Pradesh 735.2 153.96 402.78 2Maharashtra 1150.9 1128.31 86.04 7
Orissa 211.5 40.59 439.47 1Punjab 224.7 266.46 71.13 9
Rajasthan 320.97 148.38 182.45 5Tamil Nadu 202.07 695.15 24.52 13
Uttar Pradesh 224.8 364.19 52.06 11West Bengal 270.43 207.81 109.77 6
All States 5513.43 4649.69 100 -Source: Calculated
133
Table: 3.13Tax Effort of Selected States : Other Taxes
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 17.87 22.80 63.26 10Bihar 2.55 2.22 92.75 8Goa 196.14 135.21 117.09 6
Gujarat 39.35 32.30 98.35 7Haryana 8.51 41.00 16.76 15
Karnataka 38.92 23.52 133.58 5Kerala 57.12 29.91 154.18 4
Madhya Pradesh 19.82 9.83 162.80 1Maharashtra 77.73 40.07 156.56 3
Orissa 4.82 8.61 45.19 14Punjab 22.80 38.36 47.97 13
Rajasthan 8.37 12.26 55.11 11Tamil Nadu 17.27 27.66 50.39 12
Uttar Pradesh 6.14 6.90 71.85 9West Bengal 42.12 21.51 158.03 2
All States 559.53 452.13 100 -Source: Calculated
Table: 3.14Tax Effort of Selected States : Total Own Taxes
StatesActual
Revenue(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
Ranks
Andhra Pradesh 2955.37 3187.89 87.14 12Bihar 897.83 685.68 123.13 2Goa 4650.39 5895.96 74.14 15
Gujarat 4432.66 3530.60 118.01 5Haryana 3499.83 2860.45 115.01 6
Karnataka 3884.83 2856.37 127.84 1Kerala 3099.32 2624.33 111.01 8
Madhya Pradesh 2500.05 1939.34 121.07 3Maharashtra 5223.52 4819.54 101.87 9
Orissa 1627.62 1272.31 120.24 4Punjab 2974.51 3363.24 83.13 13
Rajasthan 2373.21 2005.75 111.22 7Tamil Nadu 4118.16 4028.53 96.09 11
Uttar Pradesh 1867.48 2376.01 74.16 14West Bengal 2475.06 2345.92 99.17 10
All States 46579.86 43782.61 100 -Source: Calculated
134
Table: 3.15
Tax Effort of Selected States : Summary Results
StatesTax
EffortIndex
Area of weak tax efforts
Andhra Pradesh 12 Agricultural Income Tax, Electricity Duty andOther taxes.
Bihar 2 Agricultural Income Tax, Electricity Duty andExcise Duty.
Goa 15 Agricultural Income Tax, Stamp Duty andRegistration Fee, Motor Vehicle tax & taxes onGoods and Passengers, Sale Tax, Excise Duty
and Electricity Duty.Gujarat 5 Stamp Duty and Registration Fee and Motor
Vehicle tax & taxes on Goods and Passengers.Haryana 6 Agricultural Income Tax, Electricity Duty and
Other taxes.Karnataka 1 Agricultural Income Tax and Electricity Duty
Kerala 8 Agricultural Income Tax, Excise Duty andMotor Vehicle tax & taxes on Goods and
Passengers.Madhya Pradesh 3 Agricultural Income Tax, Stamp Duty and
Registration Fee and Sales Tax.Maharashtra 9 Electricity Duty and Excise Duty
Orissa 4 Stamp Duty and Registration Fee, Excise Dutyand Other taxes.
Punjab 13 Agricultural Income Tax, Motor Vehicle tax &taxes on Goods and Passengers, Sale Tax and
Electricity Duty.Rajasthan 7 Agricultural and Other taxes.
Tamil Nadu 11 Agricultural Income Tax, Stamp Duty andRegistration Fee, Electricity Duty and Other
taxes.Uttar Pradesh 14 Agricultural Income Tax, Motor Vehicle tax &
taxes on Goods and Passengers, Electricity Dutyand Other taxes.
West Bengal 10 Stamp Duty and Registration Fee, MotorVehicle tax & taxes on Goods and Passengers,
Sale Tax and Excise Duty.Source: Calculated
135
Table: 3.16
Tax Effort of Haryana State: Land Revenue
YearsActual Tax Revenue
(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
1980-81 3.07 0.70 438.261981-82 2.78 1.39 200.541982-83 2.51 1.59 158.571983-84 2.73 1.64 166.761984-85 2.80 1.97 142.371985-86 2.62 2.06 127.581986-87 1.57 2.54 62.011987-88 0.34 3.77 8.971988-89 0.47 2.43 19.351989-90 0.46 2.08 22.051990-91 0.58 1.59 36.361991-92 0.65 1.19 54.951992-93 0.79 0.77 102.591993-94 0.77 0.76 101.351994-95 0.75 0.90 82.731995-96 0.71 2.19 32.491996-97 1.29 1.63 78.911997-98 2.03 2.61 77.941998-99 1.96 2.62 74.751999-00 2.11 3.14 67.312000-01 5.62 3.73 150.982001-02 9.01 4.80 187.962002-03 4.54 5.08 89.442003-04 9.04 5.43 166.572004-05 5.20 6.18 84.242005-06 5.22 6.92 75.54
All Years 69.62 69.73 100Source: Calculated
136
Table 3.17
Tax Effort of Haryana State: Stamp Duty and Registration Fee
YearsActual Tax Revenue
(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
1980-81 14.35 15.12 94.361981-82 19.35 17.29 111.341982-83 18.74 19.68 94.731983-84 20.39 21.63 93.781984-85 22.75 23.86 94.871985-86 25.88 28.19 91.321986-87 30.84 30.37 101.051987-88 31.97 36.75 86.561988-89 45.50 41.98 107.841989-90 58.13 46.98 123.111990-91 62.27 58.20 106.441991-92 58.59 52.94 110.101992-93 61.39 57.40 106.381993-94 68.25 85.66 79.271994-95 91.21 99.87 90.851995-96 132.88 112.69 117.301996-97 144.73 131.91 109.151997-98 155.98 144.79 107.181998-99 148.53 163.51 90.371999-00 152.37 183.45 82.632000-01 200.98 218.58 91.472001-02 228.17 242.71 93.532002-03 248.91 264.42 93.652003-04 314.20 293.07 106.652004-05 322.78 325.69 98.592005-06 415.02 361.33 114.27
All Years 3094.16 3078.04 100Source: Calculated
137
Table 3.18
Tax Effort of Haryana State: Sales Tax
YearsActual Tax Revenue
(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
1980-81 82.88 84.25 98.091981-82 105.55 100.37 104.851982-83 119.40 115.76 102.841983-84 121.61 128.50 94.361984-85 130.30 141.95 91.531985-86 162.18 172.57 93.701986-87 173.02 178.53 96.631987-88 200.46 194.64 102.691988-89 238.46 245.35 96.911989-90 260.79 261.09 99.601990-91 303.50 376.33 80.411991-92 371.88 304.23 121.881992-93 396.49 306.94 128.801993-94 438.40 474.31 92.161994-95 495.59 512.49 96.421995-96 573.28 581.91 98.231996-97 731.36 692.62 105.291997-98 802.84 756.60 105.801998-99 806.55 821.99 97.841999-00 967.25 889.79 108.392000-01 1233.65 1346.88 91.332001-02 1376.08 1484.06 92.452002-03 1534.45 1607.07 95.202003-04 1733.51 1773.85 97.442004-05 2115.02 2014.64 104.672005-06 2411.97 2267.24 106.07
All Years 17886.46 17833.97 100Source: Calculated
138
Table 3.19
Tax Effort of Haryana State: Excise Duty
YearsActual Tax Revenue
(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
1980-81 42.98 49.05 87.471981-82 51.99 57.06 90.951982-83 61.91 61.8 100.001983-84 68.4 74.5 91.651984-85 90.52 79.28 113.981985-86 110.96 105.84 104.651986-87 132.74 115.44 114.781987-88 158.54 157.59 100.431988-89 192.87 164.01 117.391989-90 236.68 292.01 80.911990-91 286.35 386.66 73.931991-92 341.87 327.77 104.121992-93 393.84 414.19 94.921993-94 431.76 422.78 101.941994-95 529.35 502.7 105.121995-96 552.96 515.07 107.171998-99 774.63 549.12 140.821999-00 765.36 729 104.802000-01 840.56 875.03 95.892001-02 875.39 1104.52 79.122002-03 878.72 984.9 89.062003-04 923.28 898.81 102.542004-05 1013.16 856.67 118.062005-06 1135 1146.78 98.80
All Years 10889.8 10870.6 100Source: Calculated
139
Table 3.20
Tax Effort of Haryana State: Motor Vehicle Tax and Taxes on Goods and Passengers
YearsActual Tax Revenue
(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
1980-81 42.67 36.68 92.511981-82 50.4 43.82 91.471982-83 57.8 44.32 103.711983-84 63.99 49.44 102.921984-85 68.99 58.46 93.851985-86 81.17 63.58 101.531986-87 88.88 75.05 94.191987-88 96.89 92.84 83.001988-89 113.57 113.61 79.501989-90 122.26 87.17 111.541990-91 137.88 114.07 96.131991-92 188.29 153.06 97.831992-93 212.17 157.43 107.181993-94 213.69 146.06 116.351994-95 240.38 163.81 116.701995-96 253.98 242.89 83.161996-97 321.23 270.14 94.571997-98 398.32 275.87 114.831998-99 387.2 350.35 87.901999-00 408.62 378.16 85.932000-01 452.35 403.38 89.182001-02 602.19 449.46 106.552002-03 767.14 494.19 123.452003-04 792.75 596.86 105.632004-05 841.97 656.20 102.042005-06 830.00 714.30 92.41
All Years 7834.78 6231.23 100Source: Calculated
140
Table 3.21
Tax Effort of Haryana State: Other Taxes(Including Electricity Duty & Entertainment Tax)
YearsActual Tax Revenue
(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
1980-81 19.96 11.0 343.951981-82 20.84 12.7 310.921982-83 27.93 14.5 363.381983-84 34.18 15.8 407.851984-85 25.99 17.4 281.751985-86 34.05 21.2 303.211986-87 39.99 22.3 338.711987-88 43.29 25.0 326.381988-89 46.97 32.4 273.641989-90 42.72 36.1 223.611990-91 48.17 44.1 206.121991-92 50.93 52.9 181.871992-93 58.38 56.1 196.411993-94 53.96 66.4 153.441994-95 62.9 78.7 150.821995-96 60.67 89.4 128.171996-97 102.16 106.9 180.381997-98 62.39 115.9 101.591998-99 59.99 130.9 86.501999-00 62.04 146.7 79.822000-01 13.28 165.0 15.192001-02 41.22 181.7 42.832002-03 15.13 198.5 14.392003-04 78.38 221.9 66.692004-05 82.1 249.0 62.252005-06 79.6 279.0 53.86
All Years 1267.22 2391.6 100Source: Calculated
141
Table 3.22
Tax Effort of Haryana State: Total Own Taxes
YearsActual Tax Revenue
(Rs. In Cr.)
TaxPotential
(Rs. In Cr.)
TaxEffortIndex
1980-81 205.91 196.8 103.18351981-82 250.91 232.63 106.36781982-83 288.29 257.65 110.34621983-84 311.3 291.51 105.31341984-85 341.35 322.92 104.24681985-86 416.86 393.44 104.48871986-87 467.04 424.23 108.57021987-88 531.49 510.59 102.65511988-89 637.84 599.78 104.87641989-90 721.04 725.43 98.021571990-91 838.75 980.95 84.32251991-92 1012.21 892.09 111.89731992-93 1123.06 992.83 111.55421993-94 1206.83 1195.97 99.513871994-95 1420.18 1358.47 103.09821995-96 1574.48 1544.15 100.55541996-97 1300.77 1203.2 106.61551997-98 1421.56 1295.77 108.1921998-99 2178.86 2018.49 106.45361999-00 2357.75 2330.24 99.782622000-01 2746.44 3012.6 89.905542001-02 3132.06 3467.25 89.084622002-03 3448.89 3554.16 95.697412003-04 3851.16 3789.92 100.21192004-05 4380.23 4108.38 105.14392005-06 4876.81 4775.57 100.709
All Years 41042.07 40475.02 101.40Source: Calculated
142
Table 3.23 Table 3.23(a) Table 3.23(b)
Year
Composition of Own Non Tax Revenue Receipts of the StateGovernment (Rs. in Cr.)
Percentage Share various kinds of Own Non TaxRevenue in Total Own Non Tax Revenue Receipts of
the State Govt.Various kinds of Own Non Tax Revenue Receiptsof the State Government as a percentage of GSDP
InterestReceipts
Dividend&
ProfitsGeneralServices
Social&
CommunityServices
EconomicServices
TotalOwn
Non TaxRevenue
InterestReceipt
s
Dividend&
ProfitsGeneralServices
Social&
Community
Services
Economic
Services
TotalOwn
Non TaxReven
ue
Interest
Receipts
Dividend &
Profits
General
Services
Social&
Community
Services
Econ-omicServices
TotalOwnNonTax
Revenue1980-81 34.54 1.12 6.84 7.38 69.43 119.31 28.95 0.94 5.73 6.19 58.19 100 0.95 0.03 0.19 0.20 1.90 3.27
81-82 39.88 1.08 9.23 5.88 81.91 137.98 28.90 0.78 6.69 4.26 59.36 100 0.95 0.03 0.22 0.14 1.94 3.2782-83 46.95 0.4 14.32 10.19 88.02 159.88 29.37 0.25 8.96 6.37 55.05 100 0.97 0.01 0.30 0.21 1.82 3.3183-84 53.03 0.33 19.32 10.08 96.78 179.54 29.54 0.18 10.76 5.61 53.90 100 1.01 0.01 0.37 0.19 1.84 3.4084-85 67.93 0.3 26.24 12.61 107.4 214.48 31.67 0.14 12.23 5.88 50.07 100 1.17 0.01 0.45 0.22 1.85 3.6985-86 73.86 0.46 40.4 14.46 128.94 258.12 28.61 0.18 15.65 5.60 49.95 100 1.05 0.01 0.57 0.20 1.82 3.6586-87 80.71 0.33 47.99 15.04 152.55 296.62 27.21 0.11 16.18 5.07 51.43 100 1.09 0.00 0.65 0.20 2.05 3.9987-88 161.94 0.97 48.79 17.54 148.76 378 42.84 0.26 12.91 4.64 39.35 100 1.94 0.01 0.58 0.21 1.78 4.5388-89 77.33 0.31 87.44 18.29 171.34 354.71 21.80 0.09 24.65 5.16 48.30 100 0.72 0.00 0.81 0.17 1.59 3.2889-90 114.18 0.6 121.96 20.94 188.25 445.93 25.60 0.13 27.35 4.70 42.22 100 0.95 0.00 1.01 0.17 1.57 3.7190-91 127.05 0.39 151.78 20.47 211.41 511.1 24.86 0.08 29.70 4.01 41.36 100 0.86 0.00 1.03 0.14 1.44 3.4891-92 139.79 0.67 149.46 32.67 223.51 546.1 25.60 0.12 27.37 5.98 40.93 100 0.79 0.00 0.85 0.19 1.27 3.1092-93 95.09 0.85 53.09 29.04 282.2 460.27 20.66 0.18 11.53 6.31 61.31 100 0.51 0.00 0.28 0.16 1.51 2.4693-94 116.53 0.95 862.72 40.22 320.13 1340.55 8.69 0.07 64.36 3.00 23.88 100 0.53 0.00 3.90 0.18 1.45 6.0694-95 476.09 7.02 2599.04 41.37 349.89 3473.41 13.71 0.20 74.83 1.19 10.07 100 1.81 0.03 9.90 0.16 1.33 13.2395-96 256.93 3.14 1520.98 52.3 353.46 2186.81 11.75 0.14 69.55 2.39 16.16 100 0.86 0.01 5.11 0.18 1.19 7.3496-97 237.56 4.53 2390.93 73.49 426.16 3132.67 7.58 0.14 76.32 2.35 13.60 100 0.67 0.01 6.71 0.21 1.20 8.7997-98 237.07 2.38 1809.81 139.37 442.47 2631.1 9.01 0.09 68.79 5.30 16.82 100 0.61 0.01 4.68 0.36 1.14 6.8198-99 183.72 2.21 706.05 128.25 497.79 1518.02 12.10 0.15 46.51 8.45 32.79 100 0.42 0.01 1.62 0.29 1.14 3.4899-00 202.23 7.78 395.85 140.95 512.25 1259.06 16.06 0.62 31.44 11.19 40.69 100 0.41 0.02 0.81 0.29 1.05 2.5700-01 236.23 1.81 479.72 132.62 589.01 1439.39 16.41 0.13 33.33 9.21 40.92 100 0.43 0.00 0.87 0.24 1.07 2.62
2001-02 332.87 0.4 518.34 146.14 668.32 1666.07 19.98 0.02 31.11 8.77 40.11 100 0.55 0.00 0.86 0.24 1.10 2.752002-03 334.27 1.73 641.78 154.69 675.38 1807.85 18.49 0.10 35.50 8.56 37.36 100 0.51 0.00 0.97 0.23 1.02 2.732003-04 478.01 4.11 678.35 266.34 796.25 2223.06 21.50 0.18 30.51 11.98 35.82 100 0.65 0.01 0.92 0.36 1.08 3.012004-05 472.41 2.35 838 440.13 791.49 2544.38 18.57 0.09 32.94 17.30 31.11 100 0.57 0.00 1.01 0.53 0.95 3.072005-06 568.43 3.01 330.41 475.37 811.07 2188.29 25.98 0.14 15.10 21.72 37.06 100 0.61 0.00 0.35 0.51 0.87 2.35
80-86 17.08 -21.53 42.17 17.49 12.12 16.3486-96 12.59 28.45 50.88 14.69 11.49 27.6896-06 12.42 -3.97 -12.42 19.13 8.31 -0.2080-06 10.45 8.87 8.87 17.93 10.72 13.84
143
Table 3.24: Recoveries through user charges on various services provided by StateGovernment (as a percentage of Total Expenditure)
Year
Recoveriesfrom Social
andCommunity
Services
Recoveriesfrom
EconomicServices
Education,Art, Sports
andCulture
Health,FamilyWelfare
and WaterSupply Irrigation
Recoveriesfrom
GeneralServices
1980-81 5.57 40.88 - - 0 6.9881-82 3.72 39.74 - - 0 7.6482-83 5.26 38.02 - - 0 10.1383-84 4.43 40.02 - - 0 12.6184-85 4.78 36.09 - - 0 13.1785-86 4.87 40.47 - - 14.61 16.9786-87 4.65 43.32 - - 15.67 16.4787-88 3.92 30.90 - - 8.48 13.6488-89 3.23 37.24 - - 13.84 21.0389-90 3.47 34.46 - - 9.64 22.2990-91 3.17 32.56 2.74 4.93 11.65 24.1991-92 4.60 28.30 2.75 4.48 8.64 19.5892-93 3.57 34.91 2.55 3.65 8.54 7.1193-94 4.60 36.53 2.62 7.17 9.07 52.4894-95 3.54 21.69 2.31 2.68 3.69 74.5895-96 3.29 29.52 2.08 3.86 7.72 59.2996-97 5.27 25.12 2.43 4.63 9.81 65.1997-98 8.84 24.87 2.16 5.54 9.47 55.5098-99 6.15 23.10 1.56 3.66 20.45 25.4199-00 6.24 28.59 1.70 4.90 12.45 13.6400-01 5.29 38.18 1.64 4.61 16.72 15.39
2001-02 5.36 27.68 1.45 5.02 16.16 14.872002-03 5.51 26.67 1.94 4.46 10.98 16.062003-04 8.89 29.42 2.13 4.56 43.93 15.532004-05 13.68 24.74 2.40 5.94 23.20 17.112005-06 11.26 20.20 3.77 4.40 12.26 6.81
Source: Calculated by using data from RBI, State Finances: A Study of Budgets, VariousIssues.
Table 3.25: Investment and Return on Public Sector Undertakings
YearInvestment(Rs. In Cr.) Return Rate of Return
Rate of Intereston Government
Borrowings00-01 2844 1.81 .06 11.2601-02 2906 .4 .01 9.02502-03 3067 1.73 .06 7.0803-04 1690 4.11 0.24 6.1404-05 1861 2.35 0.13 6.5605-06 2261 1.92 0.09 7.54
Source: CAG (Civil), GOH, 2005, 2006
144
Table 3.26: Financial Performance of State Electricity Boards (SEBs)
Year
Rate ofReturn on
Capitalemployed
withSubsidy(percent)
Rate ofReturn on
CapitalemployedwithoutSubsidy(percent)
CommercialLosses(-)/Profits(+)
withSubsidy
(Rs. in Cr.)
CommercialLosses(-)/Profits(+)withoutSubsidy
(Rs. in Cr.)Subsidy
(Rs. In Cr.)92-93 -23.8 -26.1 -368 -404 3593-94 -27.5 -31.2 -447 -507 6094-95 -0.8 -27.9 -13 -468 45595-96 2.6 -31.8 46 -554 599.796-97 0.41 -38.97 7 -635 641.797-98 -2.02 -47.79 -32 -765 432.498-99 -20.89 -43.25 -340 -704 364
99-00 (Pro) -36.81 -54.96 -835 -1247 41200-01 (RE) -67.51 -85.47 -1548 -1960 41201-02 (AP) -62.05 -78.68 -1537 -1949 412
Source: Annual Report on the Working of State Electricity Boards and ElectricityDepartment, May, 2002.
Table 3.27: Interest Rates Received and Paid byState Government on Loan and Advances
Year
Average interestrates received on
loan and advancesby state government
Average interestrates paid on loanand advances bystate government
Difference betweenrate of interest paid
and received00-01 .85 11.4 -10.5501-02 .63 10.5 -9.8702-03 .43 10.74 -10.3103-04 2.43 10.2 -7.7704-05 5.21 9.62 -4.4105-06 1.22 8.19 -6.97
Source: CAG (Civil), GOH, 2005, 2006.
145
Table 3.28: Per Capita Total Transfers (Tax and Grants) to the States from the Centre(in Rs.)
States
VIPlan
(1980-85)
VIIPlan
(1985-90)APS
(1990-92)
VIIIPlan
(1992-97)
IXPlan
(1997-02)
XPlan
(2002-07)Andhra Pr. 88.0 (7) 190.9 (9) 313.5 (5) 492.4 (5) 723.8 (5) 1146.7 (4)
Bihar 87.7 (8) 199.5 (6) 311.3 (7) 558.1 (3) 840.2 (3) 1247.4 (2)Goa 0.0 (-) 58.5 (15) 104.5 (15) 121.7 (15) 117.5 (15) 162.6 (15)
Gujarat 84.3 (9) 158.3 (14) 145.8 (14) 371.5 (11) 566.2 (11) 859.5 (11)Haryana 80.6 (10) 169.6 (11) 220.7 (13) 330.6 (14) 446.9 (13) 665.3 (13)Karnataka 78.6 (13) 173.1 (10) 255.2 (10) 403.2 (9) 684.6 (8) 1163.5 (3)
Kerala 89.3 (6) 200.5 (4) 309.9 (8) 471.2 (7) 704.7 (6) 1066.9 (7)M.P 89.7 (5) 199.8 (5) 315.7 (4) 570.3 (2) 862.4 (2) 1104.6 (6)
Maharashtra 80.0 (12) 163.5 (13) 241.5 (11) 342.7 (13) 410.7 (14) 582.3 (14)Orissa 130.4 (1) 268.8 (1) 446.8 (1) 610.2 (1) 915.2 (1) 1548.2 (1)Punjab 75.1 (14) 164.3 (12) 233.3 (12) 344.6 (12) 490.6 (12) 759.6 (12)
Rajasthan 90.2 (3) 232.0 (2) 388.7 (2) 543.7 (4) 764.3 (4) 1111.6 (5)T.N 89.8 (4) 197.2 (7) 313.0 (6) 448.5 (8) 649.8 (10) 985.2 (10)U.P 91.1 (2) 203.8 (3) 339.2 (3) 484.5 (6) 655.7 (9) 1016.5 (9)W.B 80.2 (11) 196.7 (8) 275.1 (9) 392.6 (10) 695.2 (7) 1051.8 (8)
Source: Calculated by using data from RBI, State Finances: A Study of Budgets, Various Issues andCenter for Monitoring Indian Economy (CMIE), Statistics on IndianEconomy/Infrastructure, Various Issues.
Note: Figure in ( ) are ranks. Higher rank lower transfers and vice-versa.
Table 3.29Share of Central Transfers in the Total Receipts of Haryana State Government
(During {1980-81 to 2006-07} different Plan Periods)(Figures in Percentages)
Plan Periods
Particulars
VIPlan
VIIPlan APS
VIIIPlan
IXPlan
XPlan
(1980-85) (1985-90) (1990-92) (1992-97) (1997-02) (2002-07)Revenue Transfersas a Percentage of
Revenue Receipts ofthe State 21.11 20.09 17.52 14.08 14.58 14.01
Loan Transfers asa Percentage of
Capital Receipts ofthe state 56.79 60.03 52.42 36.80 22.81 2.58
Aggregate Transfersas a Percentage ofAggregate Receipts
of the state 29.74 29.77 24.54 18.47 16.93 5.10Source: RBI, State Finances: A Study of Budgets, Various Issues.
146
Table 3.30Dependency of Haryana State Government on Central Transfers
(During {1980-81 to 2006-07} different Plan Periods)(Figures in Percentages)
Plan Periods
Particulars
VIPlan
VIIPlan APS
VIIIPlan
IXPlan
XPlan
(1980-85) (1985-90) (1990-92) (1992-97) (1997-02) (2002-07)Revenue Transfers as aPercentage of Revenue
Expenditure of theState 23.23 21.29 17.39 13.64 12.49 13.91
Loan Transfers asa Percentage of
Capital Expenditure ofthe state 39.00 53.44 59.47 61.27 37.85 7.29
Aggregate Transfers asa Percentage of
Aggregate Expenditureof the state 28.58 29.77 25.00 19.92 16.80 12.32Source: RBI, State Finances: A Study of Budgets, Various Issues.