The Ministry of Finance on Friday announced that it has released the sixth equated installment of Rs 6,195.08 crore to 14 states as grants-in-aid to cover the deficit on post devolution revenue as recommended by the 15th Finance Commission amid the coronavirus crisis. The finance ministry had released the first installment on April 3.
“The government on September 10, 2020, released Rs 6,195.08 crore to 14 states as the sixth equated monthly installment of the Post Devolution Revenue Deficit Grant as recommended by the 15th Finance Commission,” Finance Minister Nirmala Sitharaman tweeted. She also shared details of each state’s share.
Kerala received the the maximum amount from the government – Rs 1,276.92 crore, followed by Himachal Pradesh (Rs 952.58 crore), Punjab (Rs 638.25 crore), Assam (Rs 631.58 crore), Andhra Pradesh (491.42 crore), Uttarakhand (Rs 423 crore), West Bengal (Rs 417.75 crore), Tamil Nadu (Rs 335.42 crore), Nagaland (Rs 326.42 crore), Tripura (Rs 269.67 crore), Manipur (Rs 235.33 crore), Mizoram (Rs 118.50 crore), Meghalaya (Rs 40.92 crore) and Sikkim (Rs 37.33 crore).
The release of the grant came as state governments face loss of revenue on account of the Goods and Services Tax implementation. The Centre is yet to pay compensation to the states for the shortfall in GST collections.
On August 29, the Union Ministry of Finance had put forth two options before states to meet the shortfall of Rs 2.35 lakh crore in GST compensation for 2020-’21. The first option is that the states may borrow the full compensation deficit of Rs 2.35 lakh crore via a special window in consultation with the RBI. The second option entailed borrowing the entire projected shortfall of Rs 2.35 lakh crore this year, facilitated by the central bank.
Several non BJP-states, including West Bengal, Kerala and Chhattisgarh, have rejected the options proposed by the Centre and said that it should borrow to meet the compensation deficit. Whereas, BJP-ruled Karnataka had last week said it has decided to go with the first option given by the Centre.
On September 1, Delhi Chief Minister Arvind Kejriwal wrote to Prime Minister Narendra Modi to consider more “legally viable and sustainable” options to provide compensation to states amid the financial crisis. He had also suggested that the GST Council should consider authorising the Centre to borrow on its behalf and extend the period of collection of cess beyond 2022. Jharkhand Chief Minister Hemant Soren had also asked Modi to intervene in the matter to reinforce the trust in the “spirit of cooperative federalism”.
Similarly, Puducherry Chief Minister V Narayanasamy had said the Central government was bound to compensate the states for loss of revenue.
A legal recourse available to resolve the conflict over the financing of the GST shortfall, though several state finance ministers have said that would be the last resort.