Revisit FRBM targets, release GST dues, states urge PM Modi

In Prime Minister Narendra Modi's meeting with the floor leaders of political parties YSRCP, DMK, Trinamool Congress, Shiv Sena and the government of Kerala demanded early release of GST Compensation dues to their states and relaxation in the fiscal deficit target set under the FRBM Act.

New Delhi: In Prime Minister Narendra Modi's meeting with the floor leaders of political parties in Parliament, several opposition ruled states underscored the need for revisiting the cap on their borrowing limits under the FRBM Act and also early release of GST dues to help them fight COVID-19 outbreak.

Under the FRBM Act, that was passed by Atal Bihari Vajpayee government to induce fiscal discipline in the functioning of Union and state governments, States are required to limit their fiscal deficit to 3% of their GDP.

“YSRCP, DMK, Trinamool Congress, Shiv Sena and the government of Kerala demanded early release of GST Compensation dues to their states,” said a leader from an opposition ruled state who participated in the Prime Minister’s video conference with Parliamentary floor leaders.

“These leaders also demanded relaxation in the fiscal deficit target set under the FRBM Act,” he told ETV Bharat while requesting anonymity.

“We told the Prime Minister that this is the time to revisit all such targets,” added the leader.

Almost all the states have been facing unprecedented cash crunch due to increased expenditure on account of their fight against COVID-19 pandemic and dwindling revenue receipts that have almost dried up due to the 21-day lockdown announced by the Centre to contain the community spread of the virus in the country.

The 21-day lockdown, which was lifted to be on April 14, is likely to be extended as most of the states have demanded its extension in their video conference with the Prime Minister today.

Though most of the states have demanded extension of the lockdown to prevent the community spread of the virus, they also sought immediate release of financial assistance to them.

The lockdown has severely affected their three major sources of income – GST collected on sale of petrol and diesel, GST on sale of liquor and stamp and registration duties on sale and purchase of properties.

The situation has become acute as the Union government has not released the outstanding GST dues of nearly Rs 40,000 crores for October-January period of the last fiscal.

According to a PTI report, the finance ministry paid the second tranche of Rs 14,103 crore to states yesterday (April 7), which was due since December last year.

The decision to release GST dues to states was taken by the Union government as they sent SoS to the Centre for early release of their legal dues. (SOS by States to PM Modi: Clear GST dues, allow us to borrow more to fight COVID-19)

The PTI report also stated that the government would soon release the second tranche of GST dues of Rs 34,000 crores to states. This amount pertains to the December-January period and has been pending since February.

According to provisions of the GST (Compensation to States) Act of 2017, the GST Compensation dues for February-March period have also become due and the Centre is required to settle them in this month.

“GST or any other assistance, whatever financial assistance is to be given to states that should be given to them at the earliest,” Vinayak Raut, Shiv Sena’s leader in the Lok Sabha told ETV Bharat.

The SARS-CoV-2 virus has killed 149 people in the country and more than 83,000 people across the world, forcing the governments to shut down production centres, mass public transport systems, schools and colleges, and hotels and shopping centres to deal with the unprecedented challenge.

(Article by Krishnanand Tripathi)