CA. ROHAN BHANDARE breaks down the Goa State Budget 2023 and explains the allocations for various verticals
Preparing a state budget that pleases everyone is a tough balancing act. But doing so when the expenditures are much heavier than the revenues is all the more difficult. Goa has been deprived of a vital source of revenue due to the cessation of the GST compensation. Further the current revenue from mining has merely scratched the surface of the projections in the last Budget. Given the fiscal profile, the Budget has relied on unlocking the growth through high quality infrastructure projects, green initiatives and a string of digitisation measures, while plugging leakages to augment steady revenue.
Key Figures
The Budget size has increased to Rs. 26,884.40 crores, and projects a revenue surplus of Rs. 669.46 crores pinned on the hope of increase in mining revenue and increase in the share of taxes. The allocation for health and education stands at Rs. 2,324.65 crore and Rs. 4,471.40 crore respectively, with an increment of more than 15% over the previous year. Although the Government has not towed the lines of the FRBM Act and has not fully utilised the borrowing sanction limits of the Central Government, the fiscal deficit of `4,183 crores would no doubt need attention.
Infrastructure
Investing in infrastructure not only spurs the economy through its capacity creation and jobs, but also provides tangible assets to showcase at the time of elections. Among the plethora of projects spread across multiple annexure of the Budget document, the four laning of Anmod to Mollem, four laning of Khandepar Section of NH-748 and the new Borim Bridge will rejuvenate the inter-state logistics, whilst the opening of the second part of Zuari Bridge will ensure a permanent solution to the traffic congestions. With the increased traffic to Mopa, the construction of the six-lane elevated corridor in Porvorim is well timed. All eyes are now on the yet to be unveiled Logistics Policy to be the guiding light to connect the infrastructure dots.
Industry
Although the allocations for the industry could have been better, the proposals for digitisation, decriminalising, and simplifying compliances will help in the ease of doing business. Extending the coverage of the Credit Guarantee Fund Trust for Micro and Small Enterprises and extending loans to startups under Chief Minister’s Rojgar Yojana (CMRY) will provide much needed capital to entrepreneurs. The proposal to develop an online portal to issue labour cards solely based on Aadhaar Card will not only keep a digital record of the labour in Goa, but will also help the industry to fulfill their KYC and employee obligations efficiently.
Adhering to pollution norms, the manufacturing sector had recently stopped using pet coke and furnace oil as fuel, and had moved towards greener fuels such as Piped Natural Gas (PNG). While the erstwhile fuels used by the industry were under the ambit of the Goods and Service Tax, the cleaner fuel of PNG is under the ambit of the Goa VAT Act, 2005. Since there is no VAT credit available on the product, it would have a cascading effect on the final cost to the consumers as well as make the products less competitive against the products from other states. The move to rationalise such taxes and strive for a gas-based economy will surely boost manufacturing in the state.
Tourism
Owing to the reduced duties on liquor in northern states, the olden days of tourists carrying a liquor bottle back from their trip to Goa have been replaced by the trendier BYOB (bring your own bottle) to Goa. The Budget has proposed to rationalise the excise duties to alleviate the FOMO (Fear of Missing Out) of high-end tourists. The proposals formulating a home stay policy, caravan tourism, helipad tours, wellness centres, and backwater and hinterland tourism will cater to a new vertical of tourists who spend more on experiences and recreational activities. The state-of-the-art convention centre will boost MICE (meetings, incentives, conferences, and exhibitions) tourism, and will cater to the volumes of corporate India. The move to levy green cess for non-Goan vehicles will encourage tourists to use local transport facilities.
Real Estate
The digital initiatives such as upgrading the property register and linking the same with financial institutions and Aadhar numbers will increase transparency and provide clear information to the stakeholders. Digitising notarial deed registrations, issuance of NIL encumbrance and encumbrance certificates will ensure a digital trail and prevent frauds.
A relief proposal has been introduced for co-operative societies to get the land transferred in their name by executing the required sale/conveyance deed at a flat fee for registrations. Similar benefits will also be extended to individuals who have entered into agreements for sale of small plots of land and constructed their residential houses and are staying in these flats without executing sale deeds. Resolving the long-standing demand of the cascading double stamp duty issues could have made the proposals even sweeter for the real estate sector. Although the fine print is yet to be released, the announcement of new land rates as per the market scenario along with the rates for built-up properties for calculation of stamp duty and registration fee should hopefully not burden the middle class and first-time home owners.
Information Technology
The Government has raised the allocations for Information Technology in its drive to make Goa the preferred IT hub, and the proposed fiber network across the state is a step in the right direction. To attract remote working professionals, sea hub models will be constructed at 12 major beaches in Goa to ‘work from anywhere’. The special investment policy for electronic manufacturing clusters is encouraging, but a lot of heavy lifting will be required to make this practical.
Green Initiatives
Goa has capitalised on the Union Budget theme with an enormous Rs. 4,145.40 crore allocation towards green initiatives to be future ready. The formulation of a Green Goa Policy, and the proposal to make Goa the carbon credit capital of India are ambitious and tailor made for Goa’s ecology. While extending the EV Subsidy Scheme is a low hanging fruit, investment in green technology, the pilot projects on green hydrogen and the installation of solar power plants for all government buildings have a longer gestation and will require significant time and energies.
Transport
There is a saying that a developed country is not a place where the poor have cars but where the rich use public transportation. The digital routes/bus-stops, the ‘Mhaji Bus Yojna’ for on boarding private bus owners and the prepaid card-based ticketing system are all steps to strengthen and encourage public transport. The introduction of the Intelligent Transport Management System will integrate buses and other modes of last mile connectivity on a user-friendly platform so that commuters can utilise public transport instead of their own vehicles. The purchase of additional e-buses is another feather in the green cap.
Revenue
With an increase in sector allocations, it is natural to expect tweaking in revenues to balance the books. The state revenues have been steadily increasing due to the bouncing back of the economy and the plugging of leakages, and tools such as Business Intelligence and Fraud Analytics (BIFA) are just the tip of the technology iceberg at the disposal of the tax departments. Further, a special task force will be assigned to scourge non-registered businesses to plug leakages and widen the tax base. The Budget has also announced the extension of the One Time Tax Settlement scheme, for payment of arrears of various taxes prior to introduction of Goods and Services Tax such as Sales Tax, Central Sales Tax, Value Added Tax, Entertainment Tax, Luxury Tax and Entry Tax. By assuring to implement the scheme by May 2023, the Government will not only garner the locked-up revenue, but will provide a litigation free ease of doing business to the taxpayers.
Concluding Remarks
The Action Taken Report for the last state budget indicated that only 34% of the proposals had been completed. With a large number of proposals announced in the current Budget, the Government has a challenging task of relentless execution of the past as well as present proposals.
As for the increased revenue expectations from mining and central taxes, I am reminded of a famous football quote. Goals (Revenue targets) are like getting ketchup out of a bottle. It cannot be obtained easily at first, but when it does arrive, it gushes.
GCCI ON GOA STATE BUDGET 2023
“The Chief Minister has once again come up with a development-oriented budget aimed at kick starting the state’s economy which has been sluggish for the last couple of years,” said Ralph de Sousa, Goa Chamber of Commerce and Industry (GCCI) President.
GCCI thanked the Government of Goa for considering their suggestions
1) Reduction of Excise Duty on high end liquor and increase on low end liquor.
2) One Time Settlement Scheme to settle old disputed and undisputed tax dues during pre-GST regime.
3) Rationalisation of VAT rate on Piped Natural Gas.
4) Expedite construction of new Borim Bridge.
5) Home stay policy and promotion of hinterland tourism.
6) Flat rates of fees for registration deeds if registered within a certain time frame.
7) Implementation of Goa Right to Citizen for time bound delivery of Public Services Act (EODB).
8) Green Credit Scheme for environmentally sustainable actions and formulate Goa Green Policy.
9) Provision of funds for micro food processing units.
TTAG ON GOA STATE BUDGET 2023
The Travel and Tourism Association of Goa (TTAG) is counting on the government to quickly implement the measures outlined for the tourism sector in the budget.
“Overall allocation in tourism budget is Rs. 262 crore, a part of which will go in paying salaries and administration costs. Further, this is just an increase of 7% over last year’s budget allocation. With no big ticket announcement on tourism, we hope spend on infrastructure, the focus on ease of doing business and completion of major projects will boost Goa’s tourism and benefit all stakeholders. We also hope to see proper implementation and enforcement of all the measures announced so that all businesses are on a playing field for the growth of the overall tourism industry. We also hope that the Government begins work on the Entertainment Policy for Goa,” said TTAG President, Nilesh Shah.
