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Five state ministers to FM Sitharaman: ‘Facing acute pressure on fiscal’ because of GST dues

Finance Minister Nirmala Sitharaman. (File photo)

Following delay in compensation payout by Centre for the August-September period, Opposition-ruled states on Wednesday asked for the immediate payment of pending dues under goods and services tax (GST) regime and an extension for the compensation period beyond 2022.

In a joint statement, five states/UTs — Kerala, West Bengal, Delhi, Rajasthan, Punjab — said they are facing “acute pressure” on their fiscal situation due to the delayed payment from Centre. “No explanation whatsoever has been furnished for this delay of nearly one month. As a result, states are facing acute pressure on fiscal, some already resorting to ways and means or even overdrafts,” said the statement signed by the five state FMs who attended the meeting of the Empowered Committee of State Finance Ministers.

West Bengal FM Amit Mitra said the pending amount for the state is at Rs 1,500 crore, while Kerala FM Thomas Isaac said the state was supposed to get Rs 1,600 crore. Punjab FM Manpreet Singh Badal said his state is awaiting Rs 2,100 crore as compensation while arrears stand at Rs 2,000 crore, while Delhi Deputy Chief Minister Manish Sisodia the GST compensation due to Delhi is Rs 2,355 crore.

As per publicly available central government data, the Centre has collected Rs 56,801 crore in April-October and paid out Rs 45,744 crore for the April-July period, leaving Rs 11,057 crore in their kitty assuming no payment has happened yet to any of the states for August-September.

Isaac later in a tweet said, “If Centre is fearing serious shortfall in GST compensation cess collection compared to requirements, answer is not defaulting payments to states. Solution is simple. Borrow the excess requirement and extend the cess beyond 5 year compensation period till loans are repaid.” The current delay has shaken the confidence of the States who have so far supported GST, Isaac added.

State FMs in their statement “appealed to Union FM to look into the matter personally and release the compensation without any further delay”, suggesting that the matter should be taken up in the next meeting of the GST Council and “a healthy mechanism be evolved to provide compensation in future with due urgency and judiciousness.”