New Delhi, Aug 25 : Three senior Congress leaders in a joint statement on Tuesday raised the issue of financial health of the states, demanding that the Centre share revenues fairly. They also took personal digs at Prime Minister Narendra Modi while making their point pertaining to finance.
Congress spokesperson Rajeev Gowda, Punjab Finance Minister Manpreet Singh Badal and former Karnataka Finance Minister Krishna Byre Gowda jointly issued the statement. This comes ahead of the GST Council meet on August 27.
“Extend the GST compensation cess collection to 10 years. Any borrowing that needs to be done to help tide over the COVID crisis must be done by the central government. It can raise resources at lower cost and can bear the debt burden better than states. Reduce the reliance on cesses and share the revenues fairly. It is high time that the Centre-state fund sharing formula from Finance Commission becomes a reality,” they said.
The Centre has also raised the borrowing limit for states by 2 per cent (from 3 to 5 per cent) of their GDSP. However, part of the hike which is 1.5 per cent would require them to undertake various reforms in sectors like power, food distribution and so on, they said.
“Very few states can meet these conditions, thus rendering this concession useless,” they said. Hence they demanded that the Centre compensate states for the expected Rs 6 lakh crore loss apart from paying states the compensation of 14 per cent as mandated by the GST Compensation Act and pay it on time. Anything less, they said is a “betrayal of the faith of India’s states”.
They cited the State Bank of India announcement that India’s states will lose Rs 6 lakh crore in revenue in FY21. These losses, they allege, arise mainly because of the “massive mismanagement of the economy by the Modi government”.
Making a political accusation, the Congress leaders claimed India’s states are going to pay the price for the Centre’s “incompetence”. “But Modiji, like Nero who fiddled while Rome burned, is focussed on feeding peacocks,” said the three.
They went on to cite media reports stating that the Modi government has informed the Parliamentary Standing Committee on Finance that it does not have funds to pay the 14 per cent GST compensation as well as reports that the Attorney General authored an opinion that there is no obligation on the Centre to pay the promised compensation which was mandated by the Goods and Services (Compensation to States) Act 2017.
“States are at the forefront of the fight against COVID. At such a time, it is crucial that the central government come to the aid of states. A loss of Rs 6 lakh crore will force states to cut down the expenditure of key programmes and policies. What steps is the Modi government taking to avert this crisis?”
“It is shocking to know that instead of taking steps to help states, it is preparing grounds for betrayal. It is replacing cooperative federalism with coercive federalism,” read the statement.
In a strong charge, the Congressmen alleged that starving states of funds has been the official policy of this government.
“While the fourteenth Finance Commission recommended states receive 42 per cent taxes from the divisible pool, the government ensured that states’ share in gross tax collections remained stagnant at 32 per cent. This is because the Centre has kept on increasing collections outside the divisible pool through cesses and surcharges. It has also reduced ‘Other Transfers’. The Fifteenth Finance Commission further reduces this divisible pool to 41 per cent,” the three leaders alleged.
They also claimed that existing allocations for disaster relief are also grossly inadequate.