Five states ruled by parties outside the National Democratic Alliance on Wednesday complained of delay in Goods and Service Tax compensation by the Centre for August and September, reported PTI. In a joint statement, the finance ministers of Delhi, West Bengal, Punjab, Rajasthan and Kerala said the delay has put them in acute financial difficulty.
“We thought we will make appeal to Union Finance Minister [Nirmala Sitharaman] saying that she must personally look into this and not violate the constitutional provisions as passed by Parliament of India,” West Bengal Finance Minister Amit Mitra told reporters. He added that this was the first time that there had been a delay. “It is a dangerous situation, there is no precedence before,” he said.
For West Bengal, the pending amount is Rs 1,500 crore, while that for Kerala is Rs 1,600 crore. “This is Centre-engineered crisis in the state finance,” alleged Kerala Finance Minister Thomas Isaac. “It has never happened in the history of India. Something drastic has to be done.”
Punjab is awaiting Rs 4,100 crore as compensation and arrears, said state Finance Minister Manpreet Singh Badal. The GST compensation due to Delhi is Rs 2,355 crore. Rajasthan’s total due amount is not yet clear.
In their joint statement, the ministers said the Centre has not given any explanation for the delay. According to a constitutional amendment, states are eligible for compensation from the Centre when they fall below 14% rate of growth of their revenue. “GST comprises nearly 60% of the tax revenues of States,” it said. “Many states are already facing deficits up to 50% of the total GST. Such huge deficits have the potential to disrupt the budget and planning processes in a host of areas literally bringing activities of the States to a grinding halt.”
The ministers also recalled that the states had agreed to “subsume their fiscal sovereignty into GST” because of the assurance of compensation. “The current delay has shaken the confidence of the states who have so far supported GST in a spirit of rare bonhomie,” they added. “Despite many challenges from time-to-time states have extended their support to all major decisions of the GST Council.” They suggested that the matter should be discussed at the next meeting of the GST Council.
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