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Five Non-BJP States Red-flag GST Dues

November 21, 2019 06:51 AM


THE ACCUSATION Punjab, Rajasthan, Kerala, West Bengal, Delhi accuse Centre of creating a financial crisis
Our Bureau

New Delhi:

Punjab, Rajasthan, Kerala, West Bengal and Delhi, all ruled by non-BJP parties, on Tuesday raised concerns over their pending GST compensation and accused the Centre of creating a financial crisis for them.

“GST compensation for the months of August and September, required to be paid by the central government sometime in October, continues to be outstanding till date,” a joint statement by issued by the five states said. States are facing acute pressure on their finances and are using the central bank’s ways and means facility or even overdrafts to meet payments, they said.

Speaking to reporters, West Bengal finance minister Amit Mitra said: “We thought we will 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."

All the states will be in distress if this compensation, which is due to them, is not given, he said. "It is a dangerous situation," he said, adding that this was the first time in history that there was a delay in the transfer of committed funds.

The pending amount for West Bengal is Rs 1,500 crore, he said.

Kerala finance minister Thomas Isaac said his state was supposed to get Rs 1,600 crore. "Kerala (is) under overdraft for almost one week now. This is a Centre-engineered crisis in the state finance. It has never happened in the history of India. Something drastic has to be done," Issac said.

Punjab is under threat of overdraft if the dues are not released immediately, state finance minister Manpreet Singh Badal said. The state is awaiting Rs 2,100 crore as compensation, while arrears stand at Rs 2,000 crore, he said.

Echoing similar concerns, Delhi deputy chief minister Manish Sisodia said due to the delay in payment, finances of states were under pressure. The outstanding GST compensation to Delhi is Rs 2,355 crore.

The joint statement said GST comprised nearly 60% of the tax revenues of states and several states were 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," it said.

Assurance of GST compensation was a necessary enabler in convincing states agreeing to subsume their fiscal sovereignty into GST. "It was only after the required provisions for compensation were incorporated in the Constitution that states agreed to join the GST,” the statement said, adding that the current delay had shaken the confidence of the states that had so far supported GST in a spirit of rare bonhomie.

Despite many challenges from time-to-time, states have extended their support to all major decisions of the GST Council, the statement said. The states suggested that the matter be placed on the agenda of the next meeting of the GST Council and a healthy mechanism be evolved to provide compensation in future with “due urgency and judiciousness

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