New Delhi: The Narendra Modi government is not reneging on its responsibility towards the states and has given much more than what it has collected as gross tax revenue in the current fiscal, Finance Minister Nirmala Sitharaman told Parliament.
Speaking in a Lok Sabha debate on supplementary demand for grants for 2020-21, Sitharaman said the Centre’s total transfers to the states stand at 107 per cent of the gross tax collections in the first four months of the fiscal year.
“For every Rs 100 collected as taxes by the Centre, we have transferred Rs 107 to the states as devolution and grants. The Centre has definitely gone much beyond what it had (in terms of revenue) in protecting the interest of the states,” the finance minister said, pointing out that the Centre is borrowing to meet its own expenditure.
She added that the gross tax revenues collected in the April-July period were at Rs 3.18 lakh crore, a contraction of 29.5 per cent from the year-ago period. At the same time, the Centre has transferred Rs 1.76 lakh crore as devolution to the states. But this is only 12 per cent lower than last year, she said.
GST compensation issue
Sitharaman also addressed concerns raised by opposition members on the issue of non-payment of GST compensation to the states. The Centre, so far, has not transferred the Rs 1.51 lakh crore of compensation that is due to the states for the April-July period, citing insufficient compensation cess collections.
“The Centre will discuss the matter in the GST Council to ensure that states get their compensation,” Sitharaman said, adding that she will respect the assurance given by her predecessor, the late Arun Jaitley.
However, she also pointed out that there is no provision to pay for the shortfall from the Consolidated Fund of India. She also ruled out raising taxes, as some other countries have done.
The Centre has provided states two borrowing options to meet the GST shortfall. However, many opposition-ruled states have rejected both options and asked the Centre to borrow instead.
Sitharaman also countered those who had criticised her comments that an ‘Act of God’ had adversely impacted tax collections.
“Everyone likes to use ‘force majeure’ in court. But when a homely woman says an ‘Act of god’…The FM who looks like my neighbourhood aunty…Everyone has a problem with it,” she said.
The finance minister also mentioned the border situation at Ladakh and the need for the government to be careful about its finances.
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