Other states also want immediate release of compensation.
Facing aggravated
fiscal woes due to the lockdown, states have demanded an immediate release of
their pending goods and services tax (GST) dues by the Centre, besides a hike
in the borrowing limit. To tide over the crisis, states have sought an increase
in the fiscal responsibility and budget management (FRBM) limit to 4 per cent,
from 3 per cent.
With over four
months of GST
compensation of more than Rs 40,000 crore still pending, some states even
plan to drag the central government to the Supreme Court.
West Bengal
Finance Minister Amit
Mitra wrote a letter to Union Finance Minister Nirmala Sitharaman on
Thursday, urging for an immediate release of pending compensation dues.
Compensation cess,
to be released on a bi-monthly basis, is pending for about five months. The
central government had released 65 per cent of the compensation due for October
and November. The central government is of view that it will only release
compensation out of what has been collected by way of levy of cess on luxury
and sin items like automobiles, tobacco, and aerated drinks.
“The spread of
Covid-19 has created a havoc to the state finances... non-receipt of GST
compensation from the central government has further aggravated the already
stretched state finances,” Mitra said in the letter. West Bengal's pending dues
of Rs 2,875 crore include compensation for some part of October and November
and months till March.
Mitra said a
“serious cash management situation and fiscal problem” would arise in the
coming months with GST revenues, which contribute up to 70 per cent of the
state's revenues, getting locked up due to deferment of GST return filing
dates.
States have
demanded an increase in borrowing limit even if fiscal deficit reaches 4 per
cent of state GDP, against the norm of 3 per cent, with most states planning to
front-load the exercise to the first quarter of FY21.
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