He also requested the Prime Minister to direct the Union Finance Ministry to provide a formal and categorical assurance that any spillover of the compensation due would be paid in the period after March 31, 2022. He also requested the relaxation of the conditionalities attached to the permission to be accorded by the Centre to States to borrow under the Atma Nirbhar Bharat scheme.
“These measures will ensure that not only are States treated justly and fairly in the matter of being provided the due compensation for the revenue shortfall post implementation of GST, but will also have adequate funds in 2020-21 to meet their essential expenditure commitments, and can thus effectively contribute to the revival of the economy,” he said.
The letter also stated that no compensation has been released for the shortfalls in revenue collection since April 1, 2020. As on date, a total sum of Rs 12,250.50 crore was due to Tamil Nadu
as compensation for the shortfall in GST collections, of which Rs 11,459.37 crore has accrued from April to July, 2020.
Palaniswami said due to Covid-19 an additional expenditure of nearly Rs 7,000 crore has already been incurred towards upgrading health facilities, providing medical supplies and towards relief measures for the most affected.
“For the economy to restart effectively, State Governments also need to ensure that regular budgetary expenditure on on-going schemes and programmes picks up. Hence, State Governments are in immediate need of resources.”
During the recent GST council
meeting, State Fisheries Minister D. Jayakumar had suggested that the Centre could mobilise resources and lend the funds required to the GST Compensation
Fund and that loan could be serviced through an extension of the GST Cess for a few years beyond 2021-22. “This was a very reasonable and practical suggestion and was agreed to by almost all States,” said Palaniswami.
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