"We Feel Embarrassed": Counterparts To Nirmala Sitharaman Over GST Compensation

It is embarrassing to come and ask for money, Union Finance Minister Nirmala Sitharaman was told by counterparts from six states in Delhi today. Ministers from Kerala, Rajasthan, Punjab, Madhya Pradesh, Chhattisgarh and Delhi met her over delayed transfer of compensation for losses incurred by GST implementation in 2017. Under the Constitution Amendment Bill, states were guaranteed compensation for 5 years to offset tax revenue shortfall. The Congress had raised the issue in the Rajya Sabha last week.

"We had an open discussion with Union Finance Minister over compensation (August and September) for states. The question also includes compensation for next two months... up to November. We are facing issues... can't close jails, schools and hospitals. We need to pay pensions... states have many responsibilities," Manpeet Singh Badal, Punjab Finance Minister, said.

"We can't come to Delhi every day... don't feel good and we feel embarrassed. Those who ask for money are not taken seriously...Government of India is under obligation to pay," he said, adding Ms Sitharaman assured that funds would be released as soon as possible.

Goods and service Tax comprises nearly 60 per cent of tax revenues of states. Many states are already facing deficits and some have already resorted to overdrafts.

Earlier this week the centre said GST collection stood at Rs 1.03 lakh crores for November. This is the eighth time collections crossed the Rs 1 lakh crore mark. State contribution was Rs 27,144 crore.

Highlighting availability of funds, Manish Sisodia, who holds the Finance portfolio in the Delhi government, said there was an estimated Rs 50,000 crore available.

"Money from cess is Rs 50,000 crore and it is there... Finance Minister has not said why it has not been given. Delhi is due Rs 3,600 crore... bigger states are due more," he said.

Rs 27,955 crore had been released as compensation for June and July 2019.

The six ministers said they had not been given a timeline regarding release of funds but had been assured of action.

Ms Sitharaman released a statement that said the states had submitted a Memorandum.

"Some state Finance Ministers met me and requested that GST compensation due to them should be released. They have given me a Memorandum....I will definitely look into it. We are all duty-bound to follow the Act...I do not have details readily available with me as to how much GST Compensation amount is due to the States," she said.