State Bank of India on Wednesday said that it is expecting rise in the revenue of states due to increase in exchange rate and crude prices.
“We had looked into the value added tax (VAT) rates of the states and on the top of that, we are assuming that the consumption stays at the same level this year. So whatever increase in revenue is accruing to the states this year is solely because of the increase in the exchange rate and of the crude prices," said Soumya Kanti Ghosh of the company.
"For each of the states, we have done this exercise and I found out what is the increase in the total revenue accruing to each of the states purely because of the (rupee)depreciation and the exchange rate in the current fiscal and this number comes to around Rs 22,700 crore,” he said.
“One dollar increase in the states is resulting in a revenue gain of Rs 1,513 crore for 19 major states of India and this gain is over and above the budgeted fiscal deficit for the current fiscal. So that means that in the long-term, if we are assuming that the exchange stays at 72 per dollar and crude stays at $75 per barrel, this gain will be over and above the budgeted fiscal deficit. That means the consolidated fiscal deficit – other things remaining unchanged could actually push down the deficit by 15-20 basis points purely because of this increase in the oil prices and not of rupee depreciation,” Ghosh added.
One basis point is a hundredth of a percentage point.
“On a net-net basis, there is an element of gain because of the current oil prices rally and the rupee depreciating,” he further mentioned.