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The Uttar Pradesh government assured on Saturday that despite huge dip in revenue in the first month of 2020-21 fiscal due to lockdown, the government would continue to meet its obligations of payment of salaries to 16 lakh state employees, teachers and pensions to 12 lakh pensioners.
Finance Minister Suresh Khanna said that there was a huge dip in revenue in the first month 2020-21 fiscal but the salaries and pensions were credited to the accounts of employees and pensioners on May 1.
“There has been a drastic decline in GST, VAT and Excise revenues and all government departments have suffered from the adverse economic situation due to lockdown. Against a revenue target of Rs 1,66 lakh crore for 2020-21, the actual recovery in April was only Rs 2,012.66 crore, a mere 1.2 percent of the target.  Against a target of Rs 19,718 crore of non-tax revenue in 2020-21, the recovery in April was only Rs 282.12 crore or 1.5 percent of the target,” Khanna pointed out.
“The collection of GST was Rs 1,448 crore against the target of Rs 4,930 crore in April and the collection of VAT was Rs 401 crore against the target of Rs 2,400 crore in April. Besides, revenue collection from alcohol was also down due to lockdown and it fetched only Rs 42 crore against a target of Rs 3,560 crore,” he said.
The state government has started controlling its expenditure and has slashed the salary of ministers and MLAs by 30 percent while MLA Local Area Development Fund has been suspended for a year. Besides, entire annual expenditure of over Rs 1,500 crore has been transferred to Chief Ministers COVID relief fund.
To tide over the gaping hole in state’s finances, the government intends to hike VAT on diesel and petrol. Tax on alcohol, cigarette and pan masala is also proposed to be hiked. The government could also hike duty on alcohol as it is still out of purview of GST while for pan masala and cigarette. it would have to place the matter before the GST Council. A hike in VAT could fetch additional revenue of  upto Rs 3,000   crore per annum.
In 2019-20, UP earned over Rs 75,000 crore from GST and VAT, Rs 17,963 crore from stamps and registration against the target of Rs 19,179 crore.  The tax from excise duty on alcohol was targeted to be Rs 31,517 crore but the revised estimate was Rs 29,403 crore. This further plummeted due to lockdown.