Government services may become costlier

Rates of many government services like issue of passport, public works, patents, security and copyright may go up soon, as their administrative ministries have agreed to the finance ministry's suggestion of increasing the user charges for such services.

The finance ministry had written to all departments to review charges for services where the cost of delivery was higher than the revenue generated.

The idea was to maximise non-tax revenue from services, which comprise about half of the total non-tax revenue of Rs 1,25,435 crore (Rs 1,254.35 billion) the government is expecting to collect this financial year.

"We are trying to capture non-tax revenue from places where service delivery is cheaper than actual revenue. The government's intention is not to maximise profits, but at least you should be able to recover the cost," said a finance ministry official, adding the ministries were willing to revise the rates.

The official said the increase in charges of services might not add significantly to the revenue kitty, but it would be appropriate to price these in line with the rise in inflation.

Charges of many services have not been revised for several years. For example, the charge for issuing a fresh passport has been Rs 1,000 since 2002.

States have also not adequately revised rates of some user services for years.

The Delhi Transport Corporation charges a maximum fare of Rs 15 on the longest journey, marginally higher than Rs 10

a few years ago, whereas the prices of fuel have gone up sharply.

The railways and the postal department are two key areas where there is a deficit. While the railways have a separate budget and the finance ministry cannot directly do anything, it has suggested the Department of Posts review its charges. For the postal department, expenditure is more than revenue and it has been increasing.

Some departments have increased their rates in recent years, but the increase is not commensurate with the rise in the cost of servicing. For instance, the postal department had marginally increased prices few years ago. The Central Public Works Department also revised its rates recently.

Some other social and economic services provided by the government include Central Reserve Police Force charges for security, royalty from petroleum, fees received by the registrar of companies, telecommunications, health services, education, broadcasting, transport, civil aviation, among others.

The contribution of non-tax revenue to the government's Budget receipts is far less compared to tax revenue, estimated at Rs 6,64,457 crore (Rs 6,644.57 billion) for 2011-12.

In 2010-11, the revised estimate for tax revenue was Rs 5,63,685 crore (Rs 5,636.85 billion), whereas for non-tax revenue, it was Rs 2,20,148 crore (Rs 2,201.48 billion).

Non-tax revenue is estimated to be lower this year because the government had gained over Rs 1,00,000 crore (Rs 1,000 billion) last year from the sale of 2G spectrum, which may not come this year.