How Will Centre Pay Outstanding GST Share To States Following Delays And Shortfall In Revenue Collection?
India’s largest bank, SBI, in a recent report, estimated the Indian economy lost Rs 38 lakh crore in the current financial year, which is 16.9% of the country’s Gross State Domestic Product i.e. GSDP. The states hoped that the central government would help them by releasing their outstanding GST money in times of the corona crisis. But instead of giving money, the central government has advised the states to take a loan from the RBI to meet their expenditure at present.
According to the figures, Centre owes Maharashtra Rs 22,354 crore and Rs 53,000 to West Bengal. Apart from this, the Centre owes Rs 12,259 crore to Tamil Nadu, Rs 8,000 to Kerala, Rs 44,000 to Punjab, Rs 12,000 to Gujarat, Rs 5,995 crore to Madhya Pradesh and Rs 6,690 crore to Rajasthan.
At the time when GST was implemented, there was an agreement between the Centre and the State that from now on the Central Government will compensate for the loss of tax to the state. But last year itself, the country was hit by a severe economic slowdown and Centre started delaying GST payments to states. Recently, Finance Secretary Ajay Bhushan Pandey has clarified that the government is unable to pay their share of GST tax to the states at this moment. According to an estimate, there will be a drop of Rs 2.35 lakh crore in the states’ annual GST collection.
The recent lockdown in the country is estimated to cause a loss of Rs 38 lakh crore to the states. The biggest blow will be faced by Maharashtra estimated at Rs 5,39,344 crore, followed by Rs 3,51,140 loss to Tamil Nadu. Gujarat is expected to incur a loss of Rs 3,07,041 crores, West Bengal Rs 1,84,819, and Kerala may suffer a loss of Rs 1,55,775 crores.
The financial condition of the states is getting worse day by day because there is neither income nor help from the Centre. This is causing conflict between the state and the Centre. On the other hand, economists believe the slowdown in the economy is going to last for much longer.