A panel is set to recommend strategies aimed at sustainably increasing Maharashtra’s tax and non-tax revenues. These measures will focus on strengthening the state’s fiscal position to align with the “Viksit Maharashtra @ 2047” vision, which aims for comprehensive development by the centenary of India’s independence.
Committee to Enhance State Tax Revenue and Efficiency
A committee has been established to evaluate the buoyancy and stability of the state’s tax revenues, focusing on components such as Goods and Services Tax (GST) and Value Added Tax (VAT) on petroleum and liquor. The committee will recommend strategies to improve tax collection by integrating various tax and administrative databases and employing analytics and risk-based enforcement. Specifically, it will explore methods to boost revenue from alcohol for human consumption through regulatory and tax reforms while considering public health and enforcement issues.
Additionally, the committee will propose organizational and institutional reforms aimed at enhancing efficiency and transparency. This includes establishing a permanent capacity within the finance department for revenue forecasting, tax expenditure analysis, and revenue research. The committee will also assess the revenues of urban and rural local bodies, including property tax, development charges, and land value capture, as these factors impact the state’s fiscal transfers and contingent liabilities.
The government’s vision for fiscal sustainability hinges on a sustained increase in public investment in critical areas such as infrastructure, human capital, water security, urban systems, and energy transition. This commitment must be balanced against the state’s obligations for salaries, pensions, interest, and social welfare. The state has consistently met the targets set by the Maharashtra Fiscal Responsibility and Budgetary Management Act, 2005, and aims to maintain this discipline. The fiscal space available for development will largely depend on the effectiveness of the state’s revenue generation efforts and the efficiency of its expenditure allocation and execution.