Opposing the Centre’s move to reduce GST compensation amount to states, Telangana finance minister T Harish Rao today demanded the full amount and said the state government will otherwise seek legal recourse.
Rao attended a video conference with the finance ministers of five non-BJP states including Punjab, Delhi, Chattisgarh, Kerala and West Bengal on GST and IGST dues and later said the Centre was trying to shy away from its responsibility of paying the compensation in the name of “act of God” and the pandemic.
“Once again we demand that the Centre should pay full compensation under GST. “How can you reduce the compensation amount, who gave you the power? The Centre has no other option other than to pay GST compensation to the states. Centre has made a promise. You made an act in the Parliament you follow that,” said Rao. He alleged that both UPA and NDA governments suppressed the rights of the states.
According to the GST Act the Centre will compensate if state’s revenue growth was less than 14 per cent and Telangana in the past few months lost 34 per cent of its income. “It is the right of the state. We were growing in 22 per cent growth rate. So far Telangana has paid Rs 18,000 crore but got only Rs 3,200 crore so far. We were expecting compensation but now with the act of God we are losing it,” he said.
Rao said for the state there was no second option. For a state like Telangana one per cent of FRBM is Rs 10,000 crore and GST compensation amounts to Rs 10,000 crore, he added. He said whether the Centre takes or the states do both are loans. “But if the Centre borrows rate of interest will be less. Centre has more powers and more options, he added.” He said the state lost about Rs 25,000 crore revenue in the last three years after it joined GST regime.