Amidst delays in the payment of state's share in the Integrated GST )IGST) and dues towards compensation, the Maharashtra Deputy Chief Minister Ajit Pawar took an aggressive posture saying that the Centre cannot escape from its responsibility.
The Centre should raise debt at low interest rate and clear all dues to states on a priority basis. As far as Maharashtra is concerned, Pawar said the Centre needs to clear arrears worth Rs 22,534 crore as of July and if there will be further delays the dues will go up to a record Rs 1 lakh crore in two years.
Pawar, while participating at the 41st GST Council Conference chaired by the Finance Minister Nirmala Sitharaman, said, '' As the central government has accepted the responsibility of paying the share and arrears of GST to the states on time, to get the state out of the financial crisis, the Center should provide funds to the states by taking loans at low interest rates.''
He strongly defended the state government for getting its due share in IGST and compensation at the earliest especially when the finances were hit hard because of economic downturn and coronavirus lockdown.
''Due to non-receipt of GST compensation from the Central Government on time, all the states are facing financial crisis. It is affecting development works. As almost all the states in the country are currently grappling with the Corona crisis, more funding from the Center is required. As the Center has taken a revenue guarantee, it is the responsibility of the Center to provide compensation to the states on time,'' said Pawar. He reiterated that the Centre should raise loans at lower interest rate and fulfil its commitment towards states.
Pawar to substantiate his argument said that due to financial constraints it is not possible for the states to take loans. ''If states borrow at high interest rates, it will unnecessarily affect the cess and ultimately the final burden will fall on consumers. If states try to borrow from the open market, there are fears that interest rates will rise and it will be difficult to get loans,'' he noted.
Pawar reminded that the cess introduced to compensate the states for GST losses is for a period of five years till 2022 and suggested that it should be extended further. He also recommended that the amount given to the states by the central government should be recovered by extending the period of cess and the period of cess should be extended till full recovery.
Pawar pointed out that the economic crisis caused by the coronavirus pandemic is quite unprecedented in Maharashtra which is the most advanced and leading state in the country. ''We are determined to tide over the situation but at the same time the Centre should also fulfil its responsibility. This is necessary as the GST is the main source of income and service tax of the states. The early clearance of dues by the Centre will help Maharashtra and other states to sail through the present financial crisis,'' he viewed.
*Arrears towards IGST share and GST compensation from the Centre to Maharashtra stands at Rs 22,534 crore as on July 2020
* May surge to Rs 1 lakh crore if delays from the Centre in clearing arrears
*Centre should raise the debt at lower interest rate and clear dues at the earliest
*Centre's needs to move as states are reeling under financial crisis due to Covid 19 crisis