Telangana finds Centre\'s plan to borrow when cess amount falls short, absurd
Telaangana Finance Minister T Harish Rao on Thursday termed the option given by the Centre to the state government to borrow when the Cess amount falls short as “absurd”.
Harish Rao was participating in the 41st Goods and Services Tax (GST) Council meet called to discuss compensation for states for revenue shortfall due to Covid-19.
He demanded the Union government to immediately release Rs 5,420 crore towards GST compensation and another Rs 2,700 crore towards IGST dues to Telangana.
He said if the States have to borrow, then they will be forced to pay different rates of interest and issues such as FRBM limits and duration of repayment will arise.
He said “the Centre must borrow and compensate so that the interest rate is minimum. No one exactly knows how long the impact of Covid-19 will be on the economy. No one knows the quantum of revenue shortfall, and hence, the Union government must continue paying GST compensation
once in two months.”
Harish Rao said the Centre was depositing the leftover Cess amount in the Consolidated Fund and utilizing it.
He argued that “the Union government is morally bound to compensate any revenue shortfall due to lockdown. Under the Central Goods and Services Tax Act, states were guaranteed payment for any loss of
revenue in the first five years of GST implementation from July 1, 2017.”
Stating that states have lost 60-70 per cent of their revenue by joining the GST regime, he reminded that the Centre, at the 7th, 8th and 10 GST Council meetings, had assured that the shortfall will be
compensated even if it had to take it from the Consolidated Fund or by taking a loan.
He demanded that the Centre must borrow and compensate so that the interest rate is minimum. He pointed out that “No one exactly knows how long the impact of
Covid-19 will be on the economy. No one knows the quantum of revenue shortfall, and hence, the Union government must continue paying GST compensation once in two months.”
He demanded the sub-committee under Susheel Modi must meet and prepare
guidelines for the payment of these dues immediately. Stating that the Telangana which contributes maximum GST, received the least, he pointed out so far, Telangana has paid Rs 18,082 crore to
the Centre, but has received only Rs 3,223 crore.
He said that Telangana received only Rs 169 crore in the first year of implementation of GST, nothing in the second year and negligible amount in the third year.
He said “this year, if you further decrease the amount on account of GST shortfall and Covid, States like Telangana will be at a loss.”
He also pointed out that the present attitude of the Centre helping only those States that faced natural calamities and forgetting progressive States like Telangana is detrimental to its growth.
Finance Ministers from several States were in complete support of Telangana’s point of view.
