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'Centre engineered crisis': Modi govt delays payment of GST dues to 5 non-BJP states

The states have proposed that the matter be put up on the agenda of the next GST Council meet to address the issue assuring compensation in future with "due urgency and judiciousness"

twitter-logo BusinessToday.In        Last Updated: November 21, 2019  | 12:48 IST
'Centre engineered crisis': Modi govt delays payment of GST dues to 5 non-BJP states
Delhi, Punjab, Rajasthan, Kerala and West Bengal Tuesday voiced their concerns over the outstanding GST compensation blaming the Centre for engineering a financial turmoil for them

Prime Minister Narendra Modi-led government has delayed the payment of GST dues to 5 non-BJP states. Delhi, Punjab, Rajasthan, Kerala and West Bengal Tuesday voiced their concerns over the outstanding GST compensation blaming the Centre for engineering a financial turmoil for them.

The states claim there is pressure on their finances due to the GST payment delay forcing them to use the Reserve Bank of India's (RBI) ways and means facility or even overdrafts to make payments.

"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," a joint statement issued by the five states said.

Also Read: GST tax base doubles, but collection up only by 14% in Karnataka

"We thought we will appeal to union finance minister (Nirmala Sitharaman) saying that she must personally look into this and not violate the constitutional provisions as passed by Parliament of India," West Bengal finance minister Amit Mitra told reporters.

He further said that "all the states will be in distress if this compensation, which is due to them, is not given. It is a dangerous situation." Mitra added that this delay in the transfer of committed funds is a first in history. He stated that the outstanding amount for West Bengal is Rs 1,500 crore.

Meanwhile, Kerala Finance Minister Thomas Isaac also said that his state was supposed to get Rs 1,600 crore. "This is a Centre-engineered crisis in the state finance. It has never happened in the history of India. Something drastic has to be done," Issac said.

Punjab Finance Minister Manpreet Singh Badal said that his state is at the risk of overdraft, if the Centre doesn't release the dues right away, which are to the tune of Rs 2,100 crore (with the backlog of Rs 2,000 crore).

Also Read: GST Council meet: No relief for ailing auto sector; hotels, catering get breather

Delhi's deputy chief minister Manish Sisodia too echoed the same concern. He said that the states were struggling due to GST payment delay by the Centre. Delhi is awaiting Rs 2,355 crore as outstanding GST compensation.

The joint statement added GST composed around 60% of the tax revenues of states and many states already faced deficits up to 50% 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 stated.

"It was only after the required provisions for compensation were incorporated in the Constitution that states agreed to join the GST," the joint statement said, further adding that the ongoing delay has wavered the trust of states that had thus far endorsed GST.

Urging finance minister Nirmala Sitharaman to look into the matter at the earliest, the states in the statement have proposed that the matter be put up on the agenda of the next GST Council meet to address the issue assuring compensation in future with "due urgency and judiciousness."

Also Read: Hopeful GST collection will rise again: Revenue Secretary Ajay Bhushan Pandey

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