BENGALURU: Chief Minister Siddaramaiah faces a significant challenge as non-tax revenue collection takes a plunge, posing concerns ahead of the 2024-25 state budget. While tax revenue continues to show growth, non-tax revenue has witnessed a negative trajectory.
As of November 31, 2023, the state of Karnataka collected Rs 7,553 crore in non-tax revenue, marking an 8% decline compared to the previous fiscal year when it collected Rs 8,224 crore during the same period. This figure falls way short of the Rs 12,500 crore target.
In stark contrast, tax revenue experienced an 11.7% growth, surpassing the Rs 1 lakh mark, reaching Rs 1.7 lakh crore by November 31, 2023.
Economists and government authorities consider non-tax revenue a potential source of untapped funds and suggest a renewed focus on this area. However, achieving this goal will require strategic reassessment and efforts to boost revenue collection, especially given the current negative growth. Diversifying revenue streams becomes vital due to limitations in resource mobilisation at the state level following the introduction of the Goods and Services Tax.
Basavaraj Rayareddi, the Chief Minister’s economic advisor, attributes the negative growth to the historical neglect of non-tax revenue. He acknowledges the challenge of aligning ambitious targets with the pace of commercial activities on the ground, stressing the need for patience.
The Department of Mines and Geology, a significant contributor to non-tax revenue through mineral royalties, reported Rs 5,600 crore collected against an annual target of Rs 9,000 crore. While officials consider the target ambitious, they remain optimistic about reaching Rs 6,500 crore by the end of the fiscal year.
R Girish, the Director of the Department of Mines, anticipates a brighter outlook for the future. He highlights forthcoming policy initiatives and pending clearances for mining projects as catalysts for revenue enhancement. Girish states, The outlook is pretty bright for the next year. For instance, clearances are pending for many mining projects. They will be cleared soon and will fill the revenue gap.
In addition to mining royalties, the government plans to augment revenue through asset monetisation and commercial utilisation of public spaces. Proposed measures include revising rental and lease amounts for government properties, increasing advertising fees, and optimising service charges and revenue from tourism.
S Subramanya, former economic advisor to the Chief Minister, advocates for a strategic focus on non-tax revenue, asserting its potential to contribute up to 40% of the total tax revenue if properly executed.
In conclusion, Chief Minister Siddaramaiah faces a significant challenge with the downward trend in non-tax revenue collection. While tax revenue continues to grow, the need to tap into the potential of non-tax revenue becomes crucial. The state has an opportunity to diversify revenue streams and explore strategic measures to bolster collection. With enhanced focus and planning, Karnataka can overcome this challenge and achieve a positive trajectory in non-tax revenue growth.
