International edition
December 04, 2020

As the govt looks at options beyond raising taxes

India: Andhra Pradesh State considers floating casinos off Vizag coast

India: Andhra Pradesh State considers floating casinos off Vizag coast
The Y.S. Jaganmohan Reddy government is looking at options beyond raising taxes on fuels, liquor, and tobacco to offset revenue shortfalls because of the coronavirus lockdown.
India | 10/06/2020

The state is looking to promote tourism through these floating casinos, in an attempt to generate resources amid a decline in revenue collections and funds transfer from the Centre, sources cited by Mint said.

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The state has reached out to the Centre for these floating casinos off the Visakhapatnam coast," a government official said.

Amid a decline in revenue collections and funds transfer from the Centre, Andhra Pradesh is exploring the feasibility of floating casinos off the Visakhapatnam coast to generate resources.

Andhra Pradesh has a coastline of around 975km along the Bay of Bengal and India’s territorial waters extend up to 12 nautical miles from the coast, where the floating casinos may operate.

The fund-starved state is also exploring the feasibility of raising resources through the lottery businessMint reported on 30 June. While only 13 states in India run lotteries, states such as Sikkim and Goa have allowed gambling.

In July last year, the Andhra Pradesh government released a white paper accusing the previous state government of misgovernance, financial mismanagement, and neglect of investment in human and physical capital. The revenue surplus, which was nearly 1% of gross state domestic product in 2006-07, declined to 0.24% in subsequent years, the white paper pointed out.

"The state doesn’t have any resources; hence, this initiative," said the first person.

There are limited avenues for states to raise taxes after the introduction of GST in 2017. With Andhra Pradesh’s outstanding liabilities at ₹3.62 trillion, the Y.S. Jaganmohan Reddy government is looking at options beyond raising taxes on fuels, liquor and tobacco to offset revenue shortfalls because of the coronavirus lockdown. The state has already raised alcohol prices by 75% during the lockdown.

“Offshore casinos are being explored for some time now. Andhra Pradesh needs revenue and has a huge coastline that can be leveraged for promoting tourism," said a second person.

The state has also been exploring financial solutions to shore up revenues. A case in point is a plan to transfer the assets of state power generation companies and distribution companies to the Andhra Pradesh Power Finance Corp. Ltd to raise funds at competitive rates, which may also help clear its power sector dues, Mint reported on 16 January.

Tax collections of states took a hit during the prolonged lockdown, and the Centre’s GST revenues, too, collapsed, resulting in a double whammy for states. Centre and states collected ₹95,480 crore in GST revenue in September, indicating receipts from the tax on consumption were stabilizing.

However, concerns regarding economic recovery remain as India’s COVID-19 death toll has crossed the 100,000 mark and the number of infections has surged past 6.5 million.

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