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Punjab CM Amarinder Singh questions centre’s recent GST move


Punjab Chief Minister Amarinder Singh says he is in complete shock and dismay after the central government refused to pay the GST compensation. Edited excerpts from an email interview with Shantanu Nandan Sharma:

What has been the impact of Covid-19 on your state’s finances?

Punjab has taken a massive hit in terms of our financial situation due to Covid. Our initial assessment of the revenue shortfall for 2020-21 was about 25% of budgetary targets. But the way things are going, we fear it could be even more, possibly 30%. It’s a huge gap. The state’s own receipt collections went down drastically, by 80%, in April when the lockdown was total. Overall, for the first quarter of 2020-21, the state’s own revenue has registered a shortfall of Rs 5,576 crore — 54% of budgetary targets.

The Centre’s total lack of support is not helping matters, of course. Not only have they not extended any significant Covid relief aid, but they have also held back our GST compensation. This is atrocious. How are we supposed to manage amid this crisis? They cannot do this, they have a responsibility to the states.

What was your first reaction when you knew you won’t receive the GST compensation?

Complete shock and dismay. That was my initial reaction and that is what I still feel. Is this the way the central government is supposed to behave in a federal polity amid a pandemic? With all other revenue sources drying up, we were banking on receiving our constitutionally guaranteed GST compensation, as I am sure other states were.

But the Centre took this highly unreasonable and appalling decision, without consulting us. Should they not have asked us how we are managing amid Covid and how we are going to combat the crisis? They say we can borrow. But the fact is the option of availing a loan against the promised dues simply amounts to shifting the burden from their shoulders and passing it on to the states.

Is this how a Union government should act vis-a-vis its own states in the midst of such an unprecedented crisis? We are already having serious difficulties in containing our outstanding debt as a percentage of GSDP, which shot up to 42.61% in 2016-17 due to the takeover of additional liability arising out of the loan taken by the previous SAD-BJP government.

How much have you borrowed so far?

So far, we have been borrowing from the market through RBI. Be- tween April and August, we borrowed `8,910 crore to bridge some of our revenue shortfall and meet some of the essential expenses. We prefer borrowing from the market as we have been able to get competitive rates.

In view of the pandemic crisis, the central government has decided to provide an additional borrowing limit of up to 2% of GSDP to the states for 2020-21, over and above the standard 3% of GSDP in a given financial year through market borrowings. However, part of this relaxation in borrowing limits is conditional, and some of these conditions are not acceptable to us, for instance that of withdrawal of free power to farmers.

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