Poor tax mop-up has states going slow on capex in H1, finds report

Mumbai: With the Centre delaying transfer of states' share of GST collection that has been consistently falling this fiscal and poor non-tax mop-up, a majority of the states are going slow on their budgeted spending, which in the first half rose only 8.7 percentage points, finds a report.

As a result, the states' fiscal spending has increased to 37.6 percent of the budget estimates, up from 31.8 percent in the same period last fiscal, says a report on the finances of 18 large states by brokerage Motilal Oswal.

This falls short of the past three years' average of 39 percent, says the report, adding at 37.6 percent total spending is weaker than 12.7 percent in Hi of FY19. It can be noted that five Opposition-ruled states led by Bengal and Kerala had on Wednesday threatened to sue the Centre for not transferring their GST share since August.

Also, barring for April, GST mop-up has never touched the Rs 1 lakh monthly target this fiscal, averaging below Rs 95,000 crore.

"The planned expenditure of large 18 states, which account for around 90 percent of all the states' spending, stood at 37.6 percent of their budget estimates in H1 of FY20, which is up from 31.8 percent in H1 FY19," says the report.