INSUBCONTINENT EXCLUSIVE:
Opposition-ruled states are up in arms against the Centre over non-payment of GST dues
Citing huge shortfall in revenue collection, the Centre had urged states to opt for borrowing
While some BJP and opposition-ruled states did go for borrowing through a special window facilitated by RBI, the others are in no mood to
back off.In the current fiscal, the total shortfall in GST collection by states was estimated at Rs 2.35 lakh crore
Of this, as per the Centre's calculation, Rs 97,000 crore is on account of GST implementation and the rest Rs 1.38 lakh crore is the impact
of the pandemic on states' revenues.So how are states coping with their expenditure?PunjabOne of the most prosperous states in India at one
time, Punjab is now reeling under severe financial crisis
The state government has not only been compelled to delay salaries and pensions of employees but has also resorted to allowance cuts
Austerity measures in government offices have been introduced.The state government raised loans worth Rs 5,300 crore up to June to meet
committed liabilities such as salaries and pensions, whose monthly outgo is Rs 2,820 crore
In another step, the state decided to follow central pay scales for new appointments to cut its salary bill
Punjab pays 25 per cent higher salaries to its employees compared to central government staff.The state government is now either hesitating
to make fresh appointments or resorting to contractual employment.So why has Punjab been compelled to resort to such measures? This is
because the state's coffers are empty as revenue generation has registered a downward trend.Like in other states, the Covid-19 pandemic has
weakened Punjab's economy too
Finance minister Manpreet Singh Badal, while asking striking employees to resume work, issued a statement saying the state has witnessed a
shortfall of nearly 80 per cent in tax revenue collection in April 2020 against budgetary targets."There is a decrease of 77 per cent in
revenue as compared to the previous year
The state's revenue has registered a shortfall of Rs 5,576 crore i.e
54 per cent as against budgetary targets
Further, revenue collections have decreased by 42 per cent compared to the previous year's corresponding period," Badal said."Punjab has
foreseen a shortfall in revenues that could be even more than the initial assessment of 25 per cent of Total Revenue Receipts (BE)
It could lead to an even higher shortfall of about Rs 26,400 crore i.e
30 per cent of our Total Revenue Receipts (BE) in 2020-21," he added.A state government official not wanting to be named said Punjab
registered an increase of 27 per cent in GST revenue in July when pan-India GST revenue fell by 3.8 per cent."The state's GST revenue inflow
rose to Rs 1,103 crore from Rs 870 crore in June 2020
The irony is that the Centre has not released Rs 6,500 crore as Punjab's GST compensation for the last four months
This is not acceptable," said government spokesperson Rajkumar Verka.While the ruling Congress is blaming the Centre for Punjab's financial
mess, opposition Shiromani Akali Dal has termed it a failure of the state government to control the mafias which are punching holes into the
state's coffers."The Centre has been releasing grants frequently
Instead of blaming it for the financial mess, the Congress government should have checked the illicit liquor and sand mafias which have
caused a revenue loss of Rs 5,600 crore to the state exchequer," said SAD general secretary Daljit Cheema.West Bengal Chief Minister Mamata
Banerjee has been reiterating that the Centre clear dues amounting to Rs 53,000 crore for her state, including Rs 4,135 crore towards GST
compensation."The central government has raised the FRBM limit from three per cent to five per cent, but only 0.5 per cent of the increased
2 per cent has been made unconditional
We request the Centre to make the remaining 1.5 per cent unconditional too for one year," she had said during a video conference meeting of
chief ministers chaired by Prime Minister Narendra Modi last month.On September 2, Mamata shot off a letter to PM Modi over non-payment of
Terming it a betrayal of trust and moral responsibility of the Union government to the states, she alleged the Centre was "violating the
very premise of federalism".Mamata said in the letter that despite assurances, states were being thrust with two "unilateral options, both
of which require the states to borrow lacks and crores of rupees when many of them are unable to pay salaries to their employees""Instead of
helping the states, is it proper for the Centre to stop assistance to states and thrust more financial burden on them?" she wrote
Mamata said that instead of states, it should be the Centre that must borrow to compensate the GST shortfall.Photo Credits: India
TodayBengal finance minister Amit Mitra too accused the Centre of attempting to destroy the economy of states
"A huge debt is being thrust upon states
It will destroy their financial health and it is being done strategically," he alleged.Mitra said, "In 2016, GDP was 8 per cent before
In 2019-20, just before Covid, it fell to 4.2 per cent - almost a 4 per cent decline
Quarterly growth (January-March) has seen a record fall to 3.1 per cent - the lowest in 11 years
Fixed investment growth rate is negative."Mitra said states had joined the GST regime agreeing to forego 70 per cent share of state taxes
over the specific assurance that they will be compensated by the Centre.Bengal power minister Sovandeb Chattopadhyay said, "How will the
state continue development work without money? A number of projects have been started by CM Mamata Banerjee and we are facing a financial
We demanded Rs 2,000 crore from the Centre but got only Rs 1,000 crore.""The Centre is asking us to take loans but it is not ready to clear
We have already taken a number of loans and we have to clear those as well
We want the Centre to take a loan as its interest is lesser than states," Chattopadhyay said.The Opposition refuses to buy Trinamool's
BJP leader Shishir Bajoria said, "The chief minister should know that she has to earn as well and not rely only on Centre's aid
Since the day she has come to power, no industry has come
If there is no industry, there will be no revenue.""Some 13 states have agreed to the Centre's proposal of borrowing
On the other hand, Mamata had blocked two central schemes in Bengal out of her ego, ensuring that people do not receive benefits
She has always avoided questions on the state's expenses, but she has to give an answer because it is the people's money," Bajoria
said.KeralaHighly-placed officials in the state finance department throw light into the possibilities of huge financial and social crises if
the present situation continues
According to data from FY 2019-20, the budget expenditure of the state is Rs 1.25 lakh crore
Salary (Rs 32,117 crore) and pension (Rs 20,321 crore) between them account for close to 50 per cent of the expenses
Over Rs 3,000 crore is spent on subsidies and welfare programmes.Having said that, the total tax revenue in the state for the first quarter
of FY 2020-21 was a mere Rs 4,000 crore as compared to the anticipated revenue of Rs 12,000 crore
Above this, the Centre is yet to transfer nearly Rs 8,000 crore as GST compensation.This will force the state to look at alternate options
The only feasible option is to cut expenses
But the lion's shares of these expenses are mandatory, such as salary, pension and interest
In this situation, the government may be forced to slash costs on subsidies and welfare schemes, but this will adversely affect those in the
lower tier of the economic structure.Kerala's average revenue growth has remained above 14 per cent over the last few years
If the present situation persists, the growth may come down to single-digit or even negative
This may leave the state with no option but to withhold pension and salary.JharkhandThe Centre owes Rs 2,500 crore as GST to the state but
despite several requests by the Hemant Soren government, it remains unpaid
Finance minister Rameshwar Oraon, however, said Jharkhand has sufficient funds as of now and there is no immediate financial crisis."We are
in a sound position to pay our salary and other bills
After lockdown was lifted, revenue and cash inflow resumed from excise, toll collection, transport, etc," Oraon said.The Opposition in
Jharkhand blamed the government for creating a hue and cry over the GST issue
Senior BJP leader and former minister CP Singh said the Hemant Soren government has failed miserably in financial management."The government
should first make it public how much they earn from a different source of revenue and what is their expenditure
Jharkhand is not the only state that did not get its share
We are in a pandemic situation, and thus, the GST cess by the Centre has not come as expected," Singh said.Madhya PradeshCabinet minister
Vishvas Sarang said, "As far as Madhya Pradesh is concerned, we have no problem
We have committed ourselves towards fighting Covid and there is no scarcity of funds
I want to thank the Prime Minister, and as far as non-BJP states are concerned, I think they are just playing petty politics."(Inputs by
Satyajeet Kumar in Ranchi)
