Serious revenue issues to arise for states after FY22: Bengal FM Amit Mitra

Amit Mitra
With the goods and services tax (GST) revenues yet to stabilise, states urged the finance commission chairman to recommend to the Centre to give an extension in compensation requirement for states by another three years. West Bengal Finance Minister Amit Mitra tells Dilasha Seth after the 37th GST Council meeting in Goa that their developmental expenditures have gone up substantially. Edited excerpts

How grave is the revenue position for states with GST collections way below expectations?

States’ developmental expenditure has gone up from 40 per cent to 60 per cent. There is a huge burden on states. Revenues from GST to states have become miserably low. Most states are growing at 3-7 per cent when they are expected to grow by 14 per cent. On one side you don't have income, on the other side, expenditure is shoved on you. This is adding you our load. 

Are you referring to Centre's social sector schemes?

Yes. The central government starts schemes such as the Sarva Shiksha Abhiyan, states do programmes. After that the Centre withdraws, and we as politically elected entities can't tell people that we can’t give you the service as centre is not giving money. The load comes on to the states commensurately. GST revenue hasn’t been up to expectations. 

What did you raise in the meeting with the finance commission chairman?
With GST yet to stabilise, If we don't get compensation after 2021-22, it will create a very serious issue. We have asked him to recommend an extension of compensation cess by three years. In Value added tax regime, in three years, everything stabilised. Here, even after 2.5 years have passed and noting stabilised. The whole structure is unstable.

What was the view of the chairman?

The chairman was very concerned that when the compensation to states stop in 2021-21, states will fall off the cliff.

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