Maharashtra Deputy Chief Minister Ajit Pawar reminded the Centre on Thursday that there is no escaping its responsibility to pay the GST share and GST compensation to states. He further called upon the Centre to pay these dues without further delay, by raising loans at low interest.
At the 41st GST Council meeting, Pawar, who holds the finance and planning department, said Centre had to clear Maharashtra’s arrears worth Rs 22,534 crores, as of July, and further delays would cause this amount to swell to Rs 1 lakh crore in two years.
Speaking on behalf of others, he said that states were reeling under a huge financial crisis due to the pandemic induced lockdown and their dues had to be cleared at the earliest.
''Due to non-receipt of GST compensation from the Central government on time, all states are facing financial crisis. It is affecting development work. As almost all states are grappling with the corona crisis, more funding is required from the Centre. Also, since the Centre has given a revenue guarantee, it is its responsibility to provide compensation to the states on time,'' said Pawar. He reiterated that the Centre should raise loans at lower interest rates to fulfil its commitment towards states.
Buttressing his argument, Pawar said that due to financial constraints, it was not possible for states to raise loans. ''If states borrow at high interest rates, it will unnecessarily affect the cess and ultimately the burden will fall on consumers. If states try to borrow from the open market, it is feared that interest rates will rise and it will be difficult to secure loans,'' he noted.
Pawar reminded that the cess introduced to compensate the states for GST losses was for a period of five years, till 2022. He recommended that the amount given to the states by the Central government be recovered by extending the period of cess and the period of cess should be extended till full recovery.
He pointed out that the economic crisis was unprecedented in Maharashtra, 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 GST is the main source of income of the states. The early clearance of dues by the Centre will help Maharashtra and other states cruise through this difficult period,'' he observed.
*Maharashtra’s arrears accruing from IGST share and GST compensation stand at Rs 22,534 crore, as on July 2020
* The amount may swell to Rs 1 lakh crore if Centre delays clearing of arrears
* Centre should raise debt at lower interest rates and clear the dues at the earliest
* States are reeling under financial crisis brought on by Covid-19; so, the Centre must move to end their hardship.