Deputy Chief Minister and State Finance Minister Ajit Pawar on Thursday said the Centre cannot shrug off its responsibility of paying the State a sum of ₹22,534 crore as compensation for the loss of revenue arising on account of the implementation of the Goods and Services Tax (GST).
“If there are further delays, the dues will go up to ₹1 lakh crore in two years,” Mr. Pawar said at the GST Council meeting, which was chaired by Union Finance Minister Nirmala Sitharaman.
When the GST was implemented in 2017, the Centre had promised to compensate States for any revenue loss for five years until 2022. “The Centre had taken the responsibility of ensuring that the State’s revenue share and compensation would be paid in a timely manner. Therefore, the Centre must make funds available to pull States out of their financial distress by taking loans at lower interest rates,” said Mr. Pawar.
At the meeting of Opposition CMs on Wednesday, Chief Minister Uddhav Thackeray had expressed the need to study if the old tax structure is better than the current GST regime.
Taking a cue from Mr. Thackeray’s emphasis on the States voicing their concerns in unison to the Centre, Mr. Pawar said all States are facing financial trouble as they have not yet received adequate GST compensation from the Centre. “This is directly impacting development works. Every State in the country is fighting the novel coronavirus and therefore the Centre must provide more funds,” he said.
The State Finance Minister said the States cannot borrow money due to financial constraints. “If States borrow at high interest rates, it will directly impact the cess and the burden will fall on consumers.” Mr. Pawar said the Centre must instead borrow money at lower interest rates and pay States their dues. He also said the compensation period should be increased from 2022.
