Chennai: Chief Minister Edappadi K Palaniswami today urged Prime Minister Narendra Modi to ensure that the States get their full dues of the GST compensation in the current year itself.
In a letter to Modi, a copy of which was released to the media here, Palaniswami said, “Agree to a mechanism in which the Government of India raises the required funds as a loan and lends it to the GST Compensation Fund against future cess receipts, so that the GST compensation can be paid in full to the States in 2020- 2021.”
He also requested the Prime Minister to provide a formal and categorical assurance that any spillover of the compensation due will be paid in the period after 31 March, 2022.
“Relax the conditionalities attached to the permission to be accorded by the Government of India to States to borrow under the Atma Nirbhar Bharat scheme,” Palaniswami said.
According to the Chief Minister, these measures will ensure that not only are States treated justly and fairly in matter of being provided the due compensation for the revenue shortfall post implementation of GST, but will also have adequate funds in 2020-21 to meet their essential expenditure commitments, and can thus effectively contribute to the revival of the economy.
In his detailed letter, the CM said, “So far, no compensation has been released for the shortfalls in revenue collection since April 1, 2020. As on date, a total sum of Rs 12,250.50 crores is due to Tamilnadu as compensation for shortfall in GST collections, of which Rs 11,459.37 crores has accrued from April to July, 2020. As you are aware, the States have suffered a severe loss in revenue in the wake of the COVID 19 pandemic and have also been at the forefront of the battle to prevent the spread of the disease. Considerable additional expenditure of nearly Rs.7,000 crore has already been incurred towards upgrading health facilities, providing medical supplies and towards relief measures for the most affected. For the economy to restart effectively, State Governments also need to ensure that regular budgetary expenditure on on-going schemes and programmes picks up. Hence, State Governments are in immediate need of resources.”
He further said that “our stance has consistently been that the Government of India has a moral and legal obligation to pay the compensation for the shortfall in GST collections. We had also indicated that it was for the Government of India to find the necessary funds to compensate the States, including from the Consolidated Fund of India, if there was a shortfall in the cess collections.”