Samprati Motghare
IIM graduate, Batch of 2014
When the new Government came to power in West Bengal in 2011, the fiscal condition of the State was in disarray. There was a huge debt burden of about Rs 2 lakh crores and the GSDP growth rate was way below national average. However, in the last three years, there has been a remarkable improvement on the economic front.
For any state, there could be three ways to increase revenue generation. They can increase the tax rates or increase the number of tax-payers or else have a combination of both. Increasing the tax rates is the easiest way out as it does not need any investment in improving the tax collection machinery. In order to bring about an increase in the number of people who pay taxes, it becomes imperative to build new avenues and bring new systems for making the whole operation accessible and affordable to the masses.
What do the numbers say?
From 2004-05 to 2010-11, West Bengal’s own tax revenue collection hovered around 4.2-4.5% of Gross State Domestic Product (GSDP). Financial year 2011-12 witnessed the collection to grow to 6.26% of GSDP, followed by 7.50% in 2012-13 and 7.9% in 2013-14. This shows that the new government has taken tax collection to a different level altogether.
Till 2010-11, West Bengal had tax revenue of Rs 21,128 crores which by the end of FY 2013-14 is estimated to touch Rs 39,100 crores, showing a spectacular growth of close to 85% in 3 years. A closer look at the numbers show that Y-O-Y growth touched a maximum of 31.56% in 2012-13, though it has remained impressive at 18.03% in 2011-12 and 19.18% expected in 2013-14.
Another important factor to consider is the decrease in Central Government’s Grant-in-Aid which was close to 11% in 2012-13 over 2011-12. This shows that the state government is constantly trying to reduce revenue deficit by increasing Own Tax Revenue collection without actually increasing tax-rates. These facts point to the seriousness of West Bengal government towards the WBFRBM Act of 2010. A significant sum of Rs 86,000 Cr has also been paid to the Central government as per the debt service obligations in the last 3 years.
Technology has helped in making it possible
West Bengal was able to raise its tax collection during a period of economic downturn and reduced profit margins for companies because of its e-governance efforts. By making every registered dealer who has to pay tax worth Rs 2 Lakh or more to make payments only electronically, government has succeeded in increasing compliance and there by plugging out possible channels of leakages. The website of West Bengal’s directorate of commercial taxes is quite user friendly and offers a range of services to the citizens. A growth of 60% in tax-revenue (in 2012-13) through stamp and registration accompanied by 17% growth in sales tax collection exemplifies how citizens favour the new way of availing government services.
IIM graduate, Batch of 2014
When the new Government came to power in West Bengal in 2011, the fiscal condition of the State was in disarray. There was a huge debt burden of about Rs 2 lakh crores and the GSDP growth rate was way below national average. However, in the last three years, there has been a remarkable improvement on the economic front.
For any state, there could be three ways to increase revenue generation. They can increase the tax rates or increase the number of tax-payers or else have a combination of both. Increasing the tax rates is the easiest way out as it does not need any investment in improving the tax collection machinery. In order to bring about an increase in the number of people who pay taxes, it becomes imperative to build new avenues and bring new systems for making the whole operation accessible and affordable to the masses.
What do the numbers say?
From 2004-05 to 2010-11, West Bengal’s own tax revenue collection hovered around 4.2-4.5% of Gross State Domestic Product (GSDP). Financial year 2011-12 witnessed the collection to grow to 6.26% of GSDP, followed by 7.50% in 2012-13 and 7.9% in 2013-14. This shows that the new government has taken tax collection to a different level altogether.
Till 2010-11, West Bengal had tax revenue of Rs 21,128 crores which by the end of FY 2013-14 is estimated to touch Rs 39,100 crores, showing a spectacular growth of close to 85% in 3 years. A closer look at the numbers show that Y-O-Y growth touched a maximum of 31.56% in 2012-13, though it has remained impressive at 18.03% in 2011-12 and 19.18% expected in 2013-14.
Another important factor to consider is the decrease in Central Government’s Grant-in-Aid which was close to 11% in 2012-13 over 2011-12. This shows that the state government is constantly trying to reduce revenue deficit by increasing Own Tax Revenue collection without actually increasing tax-rates. These facts point to the seriousness of West Bengal government towards the WBFRBM Act of 2010. A significant sum of Rs 86,000 Cr has also been paid to the Central government as per the debt service obligations in the last 3 years.
Technology has helped in making it possible
West Bengal was able to raise its tax collection during a period of economic downturn and reduced profit margins for companies because of its e-governance efforts. By making every registered dealer who has to pay tax worth Rs 2 Lakh or more to make payments only electronically, government has succeeded in increasing compliance and there by plugging out possible channels of leakages. The website of West Bengal’s directorate of commercial taxes is quite user friendly and offers a range of services to the citizens. A growth of 60% in tax-revenue (in 2012-13) through stamp and registration accompanied by 17% growth in sales tax collection exemplifies how citizens favour the new way of availing government services.
