Would 2018-19 Budget tap full potential of non-tax revenue?
SEPTEMBER 19, 2017
By TIOL Edit Team
THE annual budget exercise this year has started with a welcome eye on non-tax revenue (NTR). Certain other welcome initiatives have also been taken that can be clubbed together and viewed as modest budgetary reforms.
The initiatives for preparing Union Budget ought to take into account more factors such as impact of demonetization on both NTR and tax revenue. Absence of this factor and zero-budget would dishearten any advocate of fiscal prudence.
The Finance Ministry has articulated firmly its focus on NTR in its detailed Budget Circular 2018-19 dated 13th September 2017. The Circular says: "There would be a specific discussion on the NTR mobilised by the Ministry/Department and its potential to generate the same, and this will be duly considered while finalizing the budget allocation of the Ministry/Department. The indicative budget figures will be discussed on a net basis. The dates of discussions will be intimated separately ".
The Circular continues: "In the meantime, Financial Advisers may prepare the Budget and Expenditure Trends and Non-Tax Revenue for 2018-19 and forward the same to Budget Division along with tentative SBEs (statement of budget estimates) by 3rd October, 2017 positively ".
This might well fuel speculation as to whether Finance Minister Arun Jaitley would turn the forthcoming budget as transformatory one for NTR. Is the attempt to garner more NTR & expand NTR base driven by apprehension of moderation in tax revenue due to lingering effect of demonetization?
NTR declined from revised estimate of Rs 334770 crore for 2016-17 to budget estimate of Rs 288757 for 2017-18.
Would FM announce an across-the-board hike in fees that the Government charges for provision of many services to businesses and the public at large? Would he announce new NTR streams such as auction of landing/take-off slots during business hours at major ports?
Ideally, the Government should explore tapping NTR from areas that are either not taxed or attract low taxes. The underlying principle for revenue mobilization should be the sum of NTR and revenue from a particular sector should not make that sector uncompetitive and thus retard its growth.
One untapped revenue stream is the underutilized prime properties and land at premium locations in urban areas. Would FM announce hike in the rent for VVIPs bungalows located in Lutyens Delhi?
Would he also decide to unlock the value of super-premium land by directing VVIPs to vacate bungalows and shift to luxury apartments? The political executive has golden chance to walk the talk on raising resources for the poor.
Modi Cabinet must ponder whether it is morally and fiscally correct for VVIPs to enjoy luxury of estates spread over several acres and let large poor families rot in one-room jhuggis/shacks in slums?
It has so far used resource-raising logic to silence imposts-burdened middle class and businessmen. There is no reason why VVIPs should not make some sacrifices in their luxuries for the sake of poor, who hold decisive vote to power in Raisina Hill.
Monetization of Lutyens Delhi can be game-changer for BJP-led NDA in 2019 Lok Sabha elections. The proceeds of monetization should put in non-lapsing account for national defence and uplift of poor.
Modi Government's focus on NTR is actually part of growing realization of its importance in mobilization of revenue. In February last year, Mr. Jaitley had inaugurated a NTR portal https://bharatkosh.gov.in/ as single platform for online payment of NTR by various stakeholders.
The Circular calls upon each ministry to list efforts to recover NTR arrears. The Ministries are required to disclose whether all their respective public enterprises are paying dividend as per new dividend policy notified in May last year. NTR arrears aggregated to Rs 141966.26 crore as on 31st March 2016, according to Budget 2017-18. The largest share of these arrears is pending for over five years. This is cause for concern. We hope this issue be resolved in the forthcoming budget.
The Finance Ministry wants to categorize NTR into three broad categories in the pre-budget exercise. The Circular has thus asked for separate information on dividends paid by each public enterprise; interest on loans received from each public enterprise and all other receipts. Each type of receipt has to indicated and accounted for separately.
Such meticulous collation of information should hopefully enable the Government to spot scope for NTR enhancement.
