Challenge for Siddaramaiah as non-tax revenue plummets

BENGALURU: A huge bogey for chief minister Siddaramaiah ahead of the 2024-25 state budget is negative growth in non-tax revenue collection, although tax revenue continues to demonstrate a positive trajectory.

Until Nov 31, 2023, the state collected Rs 7,553 crore in non-tax revenue, an 8% slide compared to the corresponding period in the previous fiscal year when it collected Rs 8,224 crore. This fiscal’s figure is also a long way back from the target of Rs 12,500 crore.

This is in stark contrast to an 11.7% growth in tax revenue, which surpassed the Rs 1 lakh mark (till Nov 31, 2023) against a target of Rs 1.7 lakh crore.

Stakeholders, including economists and govt authorities, say non-tax revenue presents a picture of untapped potential and suggest heightened focus. But this will require a strategic reassessment to bolster revenue collection, especially since growth from this source is currently negative. Moreover, given limitations in resource mobilisation at the statelevel after the advent of goods and services tax, diversifying revenue streams is paramount.

Basavaraj Rayareddi, economic advisor to the CM, attributes the negative growth to “historical neglect” of non-tax revenue. He acknowledged the challenge of aligning ambitious targets with the pace of commercial activities on the ground, while emphasising the need for patience.

The department of mines and geology, a significant contributor to non-tax revenue through mineral royalties, reported a collection of Rs 5,600 crore against an annual target of Rs 9,000 crore. While officials say the target is an ambitious one, they are optimistic of collecting Rs 6,500 crore by the end of the fiscal.

R Girish, director, department of mines, anticipates a brighter outlook. He highlighted forthcom-ing policy initiatives and pending mining project clearances as catalysts for revenue enhancement.

“The outlook is pretty bright for the next year,” he said. “For instance, clearances are pending for many mining projects. They will be cleared soon and will fill the revenue gap,” said Girish.

Besides mining royalties, the govt plans to augment revenue through asset monetisation and commercial utilisation of public spaces. Proposed measures include revising rental and lease amounts for govt properties, increasing advertising fees, and optimising service charges and revenue from tourism.

S Subramanya, former economic advisor to the CM, advocated strategic focus on non-tax revenue, asserting its potential to contribute up to 40% of total tax revenue if properly executed.