DMK MP accuses FM of diluting GST compensation issue, demands white paper on economy

On Friday, DMK MP Dayanidhi Maran alleged that Union Finance Minister Nirmala Sitharaman is trying to dilute GST compensation issue by giving 'Act of God' excuse. He was referring to Sitharaman citing COVID-19 pandemic as reason for contraction of ecomy. Maintaining that states could t carry ditional burden of borrowing, he observed that Centre was indulging in deception. 

reafter, he called upon Union government to release a white paper on current ecomic crisis. He requested Centre to regularly consult opposition parties, state governments and industry representatives to boost confidence in ecomy. opposition has been up in arms against Centre over pending GST dues and contraction of ecomy by 23.9% in April-June quarter. 

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Contraction of ecomy

All sectors barring agriculture have recorded negative GDP growth during April-June quarter. India is among ecomies worst hit by COVID-19 pandemic. Elaborating on state of ecomy,  Centre ted that restrictions were imposed on n-essential ecomic activities and movement of people from March 25 to contain spre of COVID-19. It maintained that this h an impact on ecomic activities as well as data collection mechanisms.

Mentioning that timeline for filing statutory returns h been extended, it revealed that usual data sources were substituted by limited alternatives like GST and interaction with professional bodies. In this background, Union government hinted that GDP estimates are likely to undergo revision in due course. Meanwhile, GST estimates for July-September quarter shall be released on vember 27. 

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Pending GST compensation

Finance Ministry has rejected demand of multiple states and proposed two options for meeting shortfall in GST compensation. First, it suggested that states could borrow Rs.97,000 crore ( revenue shortfall arising on account of GST implementation and t taking into account COVID-19) with entire principal and interest repayment of debt to be met through cess collection in subsequent years. Moreover, states have been allowed to borrow an ditional 0.5% points under FRBM Act.

However, if states opt to borrow entire amount of Rs. 2.35 lakh crore, only principal amount shall be repaid from cess. In such a scenario, states will have to bear interest burden. Several CMs such as Delhi CM Arvind Kejriwal, Jharkhand CM Hemant Soren, West Bengal CM Mamata Banerjee, Tamil Nu CM Edappi Palaniswami, Kerala CM Pinarayi Vijayan, Telangana CM K Chandrasekhar Rao, and Chhattisgarh CM Bhupesh Baghel have written to PM Modi urging a rethink on GST compensation options.

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