The Kerala government will seek permission from the GST council to impose a 10 percent cess on the state component of GST. This, in a bid to raise emergency funds in order to undertake rehabilitation and reconstruction projects in the state, which is trying to bounce back from the aftermath of what was its worst flood in nearly a century.
The union government has already sanctioned an aid of Rs 600 crore. However an initial estimate, according to the Kerala finance minister pegs damage to the tune of almost Rs 20000 crore.
Thomas Isaac, the finance minister believes that they have no choice but to impose a cess on SGST. Kerala government has already hiked excise duty on liquor by 0.5 percent. Isaac feels that this coupled with cess money will help the state mobilise around Rs 750 crore.
Thomas Isaac said, "Rs 600 crore is the centre's allocation to my knowledge which is inadequate. There are two sets of expenditures involved, one is the relief measures immediately needed to be undertaken, which would be the current revenue expenditure."
Then there is the expenditure which is capital expenditure for rehabilitation, the reconstruction which is slightly longer timeframe, he said.
"Already I am facing a big heavy revenue deficit because due to GST tax receipts have been much below expectations, therefore I need to raise the revenue," the minister said.
Isaac said that union minister KJ Alphons's calculation is totally wrong and the amount is not sufficient. "Around 1.25 million people are living in the camps, running of the camps, when they go back they have to be provided with some money, their immediate certain compensations and so on comes to something like Rs 3000 crore. So, this Rs 600 crore given by the centre is totally insufficient," he added.
"Centre may have its own problems of fiscal deficit and therefore I am saying give me the right to have a cess on SGST," Isaac said.
It does not affect the industry trade, it does not affect the revenues of centre, so why should they be bothered, he said, adding that there must be at least this much federal flexibility to the state to mobilise revenue.
On foreign aids, Isaac said all over the globe there is a great sympathy for Kerala and people are coming forward in solidarity and making donations.
With long-standing relations that the Gulf States have with Malabar Coast and the fact that majority of the population in that country hails from Kerala, they have decided to make a donation, he said, adding that the state government did not ask for donations, they made the decision to make a donation of Rs 700 crore he said.
"This is something permitted in the National Disaster Policy of 2016. The centre won't give more money, you say you will consider but no assurance, with the assurance of this kind you cannot run a state government," Isaac said. "I need an assurance, not just a wish but total commitment, that I understand there is some difficulty for them. Then permit me to mobilise my own revenue, permit me to collect whatever donation that comes in."