Bengal demands GST shortfall compensation for another 5 years
Citing the pandemic and its after-effects, Bengal has demanded GST compensation for the states from the Union government for the shortfall in revenue for another five years.
Bengal has demanded that the Union government must compensate the states for the shortfall in GST collection for another five years.
The GST Council, however, could not come to a decision as the states had differing opinions on the matter, including on the tenure of repayment. Therefore, the GST Council formed a GoM (group of ministers) grouping to deliberate on the issue.
Under the GST law, the Union government is obligated to compensate states for a shortfall that may arise during the first five years of GST implementation, starting from 2017. Unfortunately, it has been violated due to the once-in-a-century pandemic, which has hit the economy for two years running.
According to the Bengal Finance Minister Amit Mitra, it may still take one more year to get the economy back on track.
Explaining the state’s reason for demanding compensation for another five years, he said: “Even before the pandemic, the economy was in bad shape. We strongly believe that there will be a shortfall going forward and unless the compensation period is extended, state finances will be in dire straits.
“If the compensation is not extended, the Centre will be under no obligation to meet the shortfall, leaving states to borrow themselves. However, because of the FRBM limits, states would not be able to borrow beyond a limit, which in turn, would hit the government’s spending on welfare and infrastructure creation.”
