India
A senior official stated that there had been instances where proceeds from cess collection for dedicated schemes can’t be used entirely due to several reasons like the pace of expenditure of the programme.
New Delhi: Small amounts of money that people paid in some form of cess to the government has turned into a considerable amount over the last few years. A visible part of the money collected over the last three years has not been wholly utilised, finance ministry data has revealed. For example, in 2016-17, the total amount received through cess was nearly Rs 1,78,594 crore, of which, only Rs 1,00,871 crore is utilised.
The Comptroller and Auditor General (CAG) also stressed upon the non-usage cess in higher education. The government may have their reasons for underutilisation, but according to experts, cess is like a tool to raise extra money from people, and its underutilisation means an unnecessary burden on the people.
Talking to the media, agricultural policy expert Devinder Sharma said, “It is a means to increase revenue. The government provides lakhs of crores of tax exemptions to corporates. On the other hand, it imposes an additional cess on the people."
Underutilisation of cess has come under the radar of a parliamentary standing committee which, in a recent report, has observed, “The rationale of cess is that the money it generates can only be used for the designated purpose. However, if the money is not spent for the designated purpose or is diverted, it simply stagnates and distorts the economy further, as the additional tax brings down real incomes without any gain in socio-economic indicators as targeted.”
The government officials have criticised several factors in this regard. A senior official stated that there had been instances where proceeds from cess collection for dedicated schemes can’t be used entirely due to several reasons like the pace of expenditure of the programme, implementation of the department to spend. He further continued by saying, “The budget allocation to ministries and departments for implementation of dedicated schemes is reviewed in the mid-year, and revised allocations are made, resulting in under-utilisation in certain years.”
The Ministry of Human Resources Development data reveals the primary education cess collected in the last three years has been used extensively. But, the large part of proceeds of the higher education cess remained unutilised. The revenue collection under the Krishi Kalyan Cess (KKC) in the year 2016-17 was Rs 8379 crore. The officials also claimed the proceeds had been used for meeting expenditure on interest payment for a short-term credit to farmers and Pradhan Mantri Fasal Beema Yojna (PMFBY) and only Rs 3,596 crore was credited to Krishi Kalyan Cess.
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