The Centre’s demonetisation move, which Chief Minister Naveen Patnaik supported, has adversely impacted the Odisha Government as there has been a negative growth in collection of both tax and nontax revenues.
During the month of December, the State’s own tax collection faced a decline of 11 per cent, and the trend is expected to persist in January also.
A latest report on ‘Impact of Demonetization’ of the Stare Government has revealed that economic activities were interrupted in the both manufacturing and service sectors.
Communications, construction, real estate, transport, retail rrade, hospitality and other allied sectors have also been hit by the move of scrapping of the higher version notes.
These sectors have been adversely affected as availability of enough new notes was a problem. This has brought steep deceleration of State’s economy and public finances, admitted the State Government in its report prepared by the Finance Department.
While rural areas are still facing cash crunch, the experts now feel that Rs100 and Rs 500 notes need to be supplied adequately for economic activities to resume normally in the State.
Besides, the restriction on daily and weekly limits on withdrawal of funds from bank accounts should be lifted.
The State Government, which is now preparing the Budget estimates for 2017-18 now, is in a worried state, according to insiders.
From the beginning of FY 2016-17, sales tax collection was sluggish and rate of growth was nearly two per cent. However, after demonetization, it is registering a negative growth.
Similarly, excise revenue collection is registering a negative growth. The target of Rs 3,300 core may not be reached this year, predict officials.
So, senior officials are worried as fewer funds are available in the State exchequer for funding both infrastructure and social sectors while commitment is at a higher side.
Under this backdrop, State Government has urged to reduce the Central tax rates and take appropriate measures to encourage manufacturing and other sectors in view of slowdown of economy, said sources.