After closing, Maharashtra's loss of income is around Rs 40 billion
MUMBAI: The government faces a massive revenue loss estimated at around Rs 40 billion in March-April due to the coronavirus-related curfew and blockade.
Authorities say the government will have to borrow at least Rs 15 billion to Rs 20 billion to pay wages during the three-month period from April to June.
With economic activities in the state coming to a standstill, tax collection for GST, stamp taxes, excise and transportation taxes has practically stopped.
As of March 2019, the state had raised Rs 42 billion in revenue. This year, it was only Rs 17,000 crore, a 60% reduction. Similarly, in April 2019, the revenue collection was Rs 21,000 crore. This April, it is estimated between Rs 4,000 crore and Rs 5,000 crore, a 76% drop.
The Center's revenue payments, which had slowed down last year, have been further reduced. The state only received this week its GST compensation payment of Rs 1.8 billion rupees for September-October 2019. Another Rs 5 billion rupees is due from the Center to the state, a senior official said.
The state debt is currently at Rs 5.2 lakh crore. Interest payments amount to Rs 3 billion per month.
Authorities say that even after the blockade is lifted, economic activity may not resume at its peak for months, meaning that government revenue collection will also remain low.
At this point, officials believe that revenue collection may be less than 50% of the target through October. The closure caused many migrants to return to their villages. Some will want to return to their villages after the closure. They can choose to stay there until the monsoon planting ends in October, said a senior official.
The harsh economic impact of the blockade is evident in the surveys published in recent days. A report by the International Labor Organization says that the Covid-19 crisis has the potential to push 40 million informal sector workers in the country into poverty. Data from the Indian Economic Monitoring Center have estimated that unemployment in urban areas increased by more than 22% between March 22 and April 5, during the shutdown. A KPMG report states that India's growth rate could drop below 3% in the current financial year if the pandemic spreads in the country, the blockade spreads and the world economy goes into recession.