Showdown likely to be discussed at GST Council meet

Kerala to take lead in forcing Centre to pay compensation in full

T.M. Thomas Isaac

The Finance Ministers of non-BJP ruled States are gearing up for a showdown at the Goods and Services Tax (GST) Council meeting on Wednesday at the behest of Kerala to force the Centre wipe out the entire GST compensation due to the States.

From a tranche of ₹35,298 crore released on Monday, Kerala had got ₹1,600 crore as the share of August and September, but the State still remains clueless on securing the arrears for October and November.

Finance Minister T.M. Thomas Isaac who had consultations with his counterparts in other States on Monday resolved to put the Centre under duress for clearing the entire dues.

Breakfast session

Dr. Isaac will have a breakfast session with the Ministers of Chhattisgarh, West Bengal, Delhi, Rajasthan, Punjab, and Puducherry ahead of the council meeting and iron out a strategy.

He had written to Union Finance Minister Nirmala Seetharaman on Monday expressing his resentment on the Centre failing to include the compensation issue as a priority item on the council meeting agenda. The financial situation of the States is precarious and hence it should be included as the second item, he had said.

The Centre’s decision to release a component of the arrears ahead of the council meeting is being projected as the outcome of the pressure mounted by the Opposition States and a collective decision made by them to move the Supreme Court after the council meeting, sources said.

More funds needed

The State Government will soon have to mobilise ₹2,500 crore for disbursing the welfare pension for 46 lakh beneficiaries during the Christmas season and needs ₹629.48 crore for clearing the pending bills of the civil works executed by the local self-government institutions.

Funds crunch has seriously affected project execution and contractors are shying away from taking the tenders floated for new works, sources said.

Meeting the committed expenditure and clearing the bills of contractors who had taken up civil works of the Public Works Department are the other challenges before the State Government.

The cut in annual borrowing limit has further depleted its leeway for addressing the crisis. Hence, the release of the compensation arrears would not have a cushioning effect, the sources said.