The sequel of the Coronavirus pandemic and the lockdown aftermath the outbreak have collectively shaken the revenue grounds of the Indian states as the lockdown has brought the economy to a standstill and largely suspended the revenue channels leaving the states into uncertainty. 

According to the analysis carried out by the India Ratings and Research agency, Tamil Nadu could have suffered a revenue loss of Rs 8,412 crore for April month alone in the wake of the COVID-19 lockdown.

The analysis had been carried out under seven factors - state goods and services tax (SGST), state VAT on petroleum products, state excise duty on liquor, tax on the vehicle, tax and duty on the electricity, stamp duties and registration fees, and own non-tax revenue. The agency has studied and analyzed the loss of the state's own revenue for 21 major states amid the lockdown.

It has estimated that in April month, these states had faced a collective revenue loss of Rs 97,100 crore. Tamil Nadu is one of the major states that has 70% of the total revenue on the state's own revenue accounts. The rating agency has stated that it has ascertained and calculated the revenue loss of the major states based on the revised estimate of their budgets for the financial year 2020-21. 

These major states have closed April month with a significant loss despite banking the revenue in its coffers through the channel of essential services. According to the rating agency, the states had 40% of the economy functional as some of the economic activities mapped under the essential services were permitted to function amid the nationwide lockdown. These essential services have revenue-d the state governments under the heads of SGST, VAT, and stamp duties. 

Tamil Nadu government has earned Rs 12,000 crore so far in this financial year through the sale of bonds. However, for April, the rating agency has estimated that Tamil Nadu could have lost Rs 2211 crore under SGST, Rs 605 crore under state excise, Rs 1094 under stamp duties and registration fees, and Rs 2827 crore under state VAT. It also has lost Rs 502 crore on the vehicle tax, Rs 1065 crore on the own non-tax revenue, and Rs 108 crore from the duty on electricity. 

Non-tax revenue is charged by the government for providing services like police and municipal services. Recently, the Tamil Nadu government has increased the excise duty and VAT on the liquor and petroleum products respectively as these channels are the major income generators to the state government. The Tamil Nadu government has said that the increase in the VAT on petroleum would generate an additional income of Rs 250 crore monthly. Tamil Nadu Chief Minister Edappadi Palaniswami has been demanding the Center to release more funds and pending dues to the state to balance the fiscal loss amid the Coronavirus outbreak.

To read the ratings and analysis, please visit: https://www.indiaratings.co.in/PressRelease?pressReleaseID=40992&title=Major-States-Collectively-Staring-at-Likely-Revenue-Loss-of-Around-INR971-billion-in-April-2020