SOS by States to PM Modi: Clear GST dues, allow us to borrow more to fight COVID-19

ETV Bharat Thursday spoke to the leaders of four opposition ruled states - West Bengal, Kerala, Punjab and Andhra Pradesh. All of them underscored the need for immediate release of GST compensation dues lying with the Centre and an increase in their borrowing limit set by the Centre under the FRBM Act that caps the total borrowing of a state to 3% of its GDP.

New Delhi: The day Prime Minister Modi held a video conference with chief ministers to chart out a national strategy to fight novel coronavirus, several opposition ruled states across party lines demanded immediate release of their GST dues and increase in their borrowing limit, saying they need to mobilise more resources to fight this global pandemic.

They also demanded more testing kits and ventilators to prepare for the difficult times ahead in case the country records a sudden jump in the number of infected persons on the lines of other countries.

The novel coronavirus, also known as COVID-19 or SARS-CoV-2, has claimed more than 50 lives in the country and more than 48,500 across the globe as the total number of infected persons in the world reached close to 1 million in nearly three months.

ETV Bharat Thursday spoke to the leaders of four opposition ruled states - West Bengal, Kerala, Punjab and Andhra Pradesh.

The leaders included two finance ministers and two members of parliament of the ruling parties, one each from the Lok Sabha and the Rajya Sabha.

All of them underscored the need for immediate release of GST compensation dues lying with the Centre and an increase in their borrowing limit set by the Centre under the FRBM Act that caps the total borrowing of a state to 3% of its GDP.

Prime Minister Narendra Modi, other ministers, speak to chief ministers of states while following social distancing norms.

While Punjab finance minister Manpreet Badal said the state can tackle the Covid-19 pandemic on its own if the Centre clears its GST dues and arrears totalling at around Rs 6,000 crores, Kerala finance minister Thomas Issac insisted on immediate release of GST compensation dues of the state and an increase in the state’s borrowing limit which has been capped at Rs 27,000 crore under the FRBM Act.

“We can fight with the coronavirus ourselves if the Centre pays our GST Compensation dues and arrears,” Punjab finance minister Manpreet Badal told ETV Bharat.

Kerala finance minister Thomas Issac, who had last year written letters and held meetings with finance minister Nirmala Sitharaman for timely payment of GST compensation to his state as the Centre had already delayed GST payments to several states in violation of statutory provisions, mounted a sharp attack on the Union government over the lack of support to states in their fight against coronavirus.

“You may be surprised that the Central government has not extended any help to the states to fight the Covid apart from giving their normal share in the NHM (National Health Mission),” said Kerala finance minister Thomas Issac.

He said all the state governments are suffering and their revenues have come down sharply while their expenditure is rising.

“The minimum the Centre should do is to pay, at least, what they owe us. I am not asking for anything extra. That can wait, but they should just pay up the GST compensation. What they are dilly-dallying it for. This is their duty, they cannot dodge it,” Thomas Issac told ETV Bharat.

Thomas Issac’s views find echo in the views of a Rajya Sabha member of Trinamool Congress that is in power in the state of West Bengal.

“Our chief minister Mamata Banerjee has requested the Centre to release Rs 28,000 crore pending in GST compensation and certain other dues including the funds for some central scheme and also for the relief package to deal with the devastation earlier caused by the cyclone Bulbul,” said the Rajya Sabha member.

“These are legal demands, it is not as if we are demanding anything extra,” the TMC Rajya Sabha member from West Bengal told ETV Bharat while requesting not to be named.

“I think if the Centre releases some part of it in this hour of crisis then it will help the West Bengal government in containing the coronavirus pandemic,” he added.

However, Lavu Sri Krishna Devarayalu, a young Lok Sabha member from the state of Andhra Pradesh disagreed with the view that mere release of GST compensation funds by the Centre to states will enable them to fight the global pandemic.

“The Centre has to clear the GST dues in any case but I don’t think that it will be sufficient unless there is a structured plan to bailout the industries. Just by clearing the GST dues, the states can’t fight coronavirus,” YSR MP Lavu Sri Krishna told ETV Bharat.

States stare at revenue crisis due to lockdown

Delayed GST compensation funds are just one part of the problem, some states are facing problem in payment of wages and salaries to their staff and pension to retirees.

While Punjab finance minister Manpreet Badal confirmed that the state will be able to pay the salary in time this month but next month onwards it may face problem as the economic activity has come to a halt and affected the revenue collection of states.

"Not a single rupee of tax is coming in, there is no sale of petrol, diesel or liquor. Similarly, no property deals are taking place so inflows on account of stamp and registration duties have also dried up, simply nothing is coming in," Manpreet Badal told ETV Bharat.

Kerala finance minister Thomas Issac too underscored the potential loss of revenue to state governments due to a prolonged lockdown that will also impact their salary and wage payments.

"That is why all the states are now cutting the salaries and so on. If you want to fight corona, if you are serious to fight against the coronavirus, then provide more money to states," Thomas Issact told ETV Bharat.

Need to relax fiscal deficit target for states

Leaders from Kerala, West Bengal and Punjab underscored the need to relax the cap on the fiscal deficit targets fixed at 3% of the state GDP under the FRBM Act.

They said it will help states to mobilise more resources to tide over the difficult time as they fear a prolonged lockdown will cripple the economy and the industry will need a stimulus at state level as well.

While Kerala and West Bengal leaders said the cap on fiscal deficit should be increased from 3% to 5%, Punjab finance minister Manpreet Badal did not put a figure but highlighted the fact that unlike the Centre, states can’t relax the fiscal deficit target for themselves, neither can they print currency to mobilise more resources.

“They should permit the higher borrowings by the states. The Centre’s fiscal deficit will be closer to 4% rather than 3%, so they have an escape clause and they have used it, and they should do the same thing for the states,” Thomas Issac told ETV Bharat.

Trinamool Congress Rajya Sabha member also confirmed that chief minister Mamamta Banerjee has already written to the Centre to hike the fiscal deficit target to 5%.

“We have asked for relaxation of FRBM limit from 3% to 5% but there is no response,” he told ETV Bharat.

Demand for more testing kits, ventilators

At least three states contacted by ETV Bharat today raised the demands for more testing kits and ventilators to deal with the situation if there is a sudden jump in corona cases in next two-three weeks.

Kerala finance minister Thomas Issac said his state wanted to screen 10 lakh people but could not do so because of lack of adequate number of testing kits available with the Kerala government.

“We don’t have sufficient testing kits, we want much more. We want to test 1 million people but we don’t have enough kits. We want more kits, that is what is standing in the way,” said Kerala finance minister.

Lavu Sri Krishna Devarayalu, Lok Sabha member from Narasaraopet in Andhra Pradesh, highlighted the problems faced by states in procuring testing kits and protective equipment for their medical staff.

“As of now there is no clarity on testing kits as which one of them have been accredited by the Centre,” he said.

“The first thing is the need for more testing kits, even if we are importing them, the Centre has to stamp them that these are the kits that states can import. Second thing is to provide protective gear to the medical staff and cheaper alternatives for ventilators,” he told ETV Bharat.

The problem of shortage of testing kits was also highlighted by the Rajya Sabha member from West Bengal.

“There is a dearth of testing kits and particularly ventilators though the number of deaths is not so high as of now but nobody knows what will happen in the coming weeks,” he told ETV Bharat.

Kerala finance minister Thomas Issac demanded an increase in the Union government's budget allocation for the health sector to contain the global pandemic.

"The Centre should increase allocation for NHM (National Health Mission) and provide more money to the states. Now there is a health crisis in the country, the first thing that they should do is to increase the health allocation but they have not done that," he told ETV Bharat.

(Report by Krishnanand Tripathi)