New Delhi, July 3 Driven by healthy Goods and Service Tax (GST) collections and devolution from the Centre, the revenue of the top 18 states is likely to grow at a steady pace of 8-10 per cent this fiscal to Rs 38 lakh crore, a report said on Wednesday.
These states, which account for over 90 per cent of India’s gross state domestic product, grew at 7.5 per cent last fiscal, according to the CRISIL Ratings report.
While revenue from the tax on liquor sales (10 per cent of total revenue) will remain stable, mid-single-digit growth in sales tax collections from petroleum products (7-8 per cent) and grants recommended by the 15th Finance Commission (10-11 per cent) will be modest.
"The biggest impetus to revenue growth will continue to come from aggregate state GST collections that, after growing 18 per cent on-year last fiscal, will climb up another 13-14 per cent in the current fiscal," said Anuj Sethi, Senior Director, CRISIL Ratings.
Central tax devolutions, expected to grow 12-13 per cent this fiscal, will be the second important driver.
While the proportion of the devolution is determined by the Finance Commission, the overall kitty is linked to gross tax collections by the Centre.
This pool, which expanded by 19 per cent on-year last fiscal, should grow at a healthy pace this fiscal as well, supported by rising income tax and GST collections, said the report.
"Revenue from sales tax on petroleum products will grow a modest 3-4 per cent on-year this fiscal after a flattish last fiscal. This will stem from higher fuel consumption driven by vehicular and industrial activity, even as the tax structure remains largely unchanged," said Aditya Jhaver, Director, CRISIL Ratings.
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