Slipping further? Hiked taxes bring in additional revenue for cash-strapped AP

In the name of COVID-19 pandemic, the Andhra Pradesh government had taken a decision to hike state based taxes and levies last year.  Apparently, this hike which continues to burden the common man even now, is paying off as the state earned an extra ₹12,052.29 crore in tax revenues in the first five months of the 2021-22 financial year.

The state’s total revenue was an extra ₹15,688.46 crore from April to August this year, compared to the corresponding period last year, state accounts by the Comptroller and Auditor General revealed. At the same, the state almost exhausted its targeted borrowing estimate, securing loans of ₹36,976.93 crore (99.86 percent) in the first five months itself.

As per CAG accounts, AP’s revenue from April to August was ₹53,159.11 crore, compared to ₹37,470.65 crore last year.

While tax revenue increased by over ₹12,000 crore, non-tax revenue too showed a spike of ₹423.12 crore and Central grants by ₹3,213 crore.

Revenue deficit mounts 6 times

But, the revenue deficit mounted to a staggering ₹31,188.49 crore in five months against the annual target of only ₹5,000 crore. Capital expenditure, however, took a dip from ₹8,608.64 crore last year to ₹5,482.53 crore this year, indicating the state spent ₹3,125.76 crore less on development works.

At the same time, the revenue expenditure, which includes numerous freebie doles, shot up to ₹84,347.60 crore as against ₹75,669.98 crore in the corresponding period last year. Citing loss of revenue due to the Covid-19-induced lockdown last year, the state enhanced various taxes to fetch an additional ₹20,000 crore revenue per annum.

Additional taxes don’t fetch much

Among the additional levies were a ₹4,500 crore ‘prohibition tax’ on liquor, ₹600 crore revised tax on petrol and diesel, another ₹600 crore (road development) cess on petrol and diesel, ₹300 crore levy on natural gas, ₹2,000 crore tax on properties in urban local bodies and ₹350 crore ‘user charges’ on garbage.

The land values in urban areas have been hiked by 10 to 30 per cent to realise an additional ₹800 crore. The professional tax was increased for an additional income of ₹161 crore.

Despite increased revenues, the state is still financially strapped as the debts and expenditure keep mounting while there is hardly any income against expenditure. 

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Tejaswini Pagadala

Communications Consultant: TEJASWINI PAGADALA is an independent communications consultant. She has previously worked with the Andhra Pradesh Chief Minister’s Office as the Communications Officer where she has written English speeches for the CM, managed English media communication from the CMO and handled social media accounts of Andhra Pradesh Chief Minister and the Government.
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