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economy | IST

GST compensation delay: Five state finance ministers lash out at Centre

Mini

Finance ministers of as many as five Indian states have hit out at the Centre over its delay in releasing GST compensation cess for the months of August and  September.

Finance ministers of as many as five Indian states have hit out at the Centre over its delay in releasing GST compensation cess for the months of August and  September. In a joint statement, the finance minister of Delhi, West Bengal, Punjab, Rajasthan and Kerala have highlighted that their states are facing an acute pressure on their finances on account of the delay.
These states have also alleged that the lack of funds has resulted in bringing activities in states to a grinding halt.
Here is the full statement: 
Finance Ministers of the States of WB, Kerala, Delhi, Rajasthan and Punjab, who attended the meeting of the Empowered Committee of State FMs, issued the following joint statement:
“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. No explanation whatsoever has been furnished for this delay of nearly one month. As a result, States are facing acute pressure on fiscals, some already resorting to ways and means or even overdrafts.
GST comprises nearly 60 percent of the tax revenues of States. Many states are already facing deficits up to 50 percent 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 was recalled that the assurance of GST compensation was a necessary enabler in States agreeing to subsume their fiscal sovereignty into GST. This was preceded by long deliberations within the Empowered Committee where many States had apprehensions about being able to obtain uninterrupted compensation. It was only after the required provisions for compensation were incorporated in the Constitution that States agreed to join the GST.
The current delay has shaken the confidence of the States who have 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 GSTC.
State FMs appealed to Union FM to look into the matter personally and release the compensation without any further delay.
FMs also suggested that the matter should be placed on the agenda of the next meeting of the GSTC and a healthy mechanism be evolved to provide compensation in future with due urgency and judiciousness.