Top 10 states’ FY22 revenue to exceed pre-Covid levels
Revenue of the top 10 states had plunged 600 basis points (bps) last fiscal but is set to exceed the pre-pandemic level this financial year, driven by higher tax buoyancy, rise in sales tax collections from petroleum products coupled with increase...
By ET Bureau | Updated:
Reuters
States are also dependent on various grants provided by the Centre, including grants towards centrally-sponsored schemes, the Finance Commission grants, GST compensation, and revenue deficit.
Revenues of India’s top 10 states that account for about 70% of aggregate gross state domestic product are set to exceed pre-pandemic levels by about 600 basis points in FY22, said ratings agency Crisil.
The surge will be driven by higher tax buoyancy, sales tax collections from petrol and diesel and increased grants as per the 15th Finance Commission recommendations.
The ratings agency added that aggregate goods and services tax (GST) collections, which account for a fifth of the revenues of states, had recovered well in the fourth quarter of FY21 as economic activity sprung back, and the momentum continued in FY22 with April and May collections averaging Rs 0.93 lakh crore, marking an 11% growth on-year. “While the second wave of the pandemic may moderate GST collections in June and July, we expect a recovery to pre-pandemic levels by August,” said Manish Gupta, senior director at Crisil Ratings.
He added that Crisil expects India’s GDP to grow 9.5% this fiscal, which should assist GST collections to marginally better the pre-pandemic levels.
“Revenues of India’s top 10 states, which plunged 600 basis points (bps) last fiscal, are set to exceed the pre-pandemic—or fiscal 2020—levels by ~600 bps this fiscal,” the agency said Thursday, basis its analysis of revenues of Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Telangana, Rajasthan, West Bengal, Madhya Pradesh and Kerala.
