Call it the recession effect. For the first time since value-added tax was introduced three years ago, Gujarat has failed to achieve the revised VAT target of Rs 17,123 crore for fiscal 2008-09.
Incidentally, VAT has the largest contribution to the state when compared to other taxes.
According to latest official figures made available by the state finance department, Gujarat's value-added tax (VAT) income rose by just 10.25 per cent in 2008-09, to Rs 16,652.99 crore. In 2007-08, the state's VAT incomes rose by 17.84 per cent to reach Rs 15,104.54 crore, while in 2006-07, it rose by a whopping 21.36 per cent.
Sources in the finance department admitted that the latest figures show that this is the lowest rise in VAT collections in the last three years.
A senior bureaucrat admitted that the impact of recession is showing on the state's revenues. "The fall in the growth of VAT incomes is mainly due to the effect of recession over the last six months. In the first six months of 2008-09, VAT incomes were rising at the rate of more than 20 per cent, peaking at 25 per cent at one point. However, the rise dipped and was less than 10 per cent after November," he explained.
However, the state government seems to be optimistic about the future. Despite the ongoing recession and failure to achieve target in 2008-09, the government has decided to set a much bigger VAT target of Rs 18,215 crore for 2009-10.