Kerala is set to get as Goods and Services Tax (GST) compensation much less than it was initially calculated.
The Centre has to pay Kerala Rs 780 crore as GST compensation, stated State Finance Minister K N Balagopal.
In October, Balagopal had claimed in the Assembly that the Centre had to pay Rs 4,466 crore as compensation but had mentioned the amount as Rs 1,548 crore in a note personally handed over to the Union Minister on November 14.
Following this, Shasi Tharoor, MP, stated in the Lok Sabha recently that Rs 4,466 crore was due to Kerala as compensation. However, Union Finance Minister Nirmala Sitharaman, in her reply to Tharoor, said that only Rs 780 crore was payable and that the amount would be paid when the audit report was presented.
Balagopal's statement
Minister Balagopal posted his statement on Facebook admitting that the amount payable by the Centre is Rs 780 crore. He claimed the confusion was created by the differing calculations by the Centre and the State.
But Balagopal says that Kerala had suffered a shortfall of Rs 12,000 crore a year after the payment of GST compensation ended. Over and above this, there was a shortage of around Rs 6,700 crore in the revenue deficit grant payable to the State this year.
After the debts of the Kerala Infrastructure Investment Fund Board (KIIFB) and the social welfare pension board, which get their funds from non-budget sources, were clubbed with the general debt, the State was denied the eligible loan of Rs 12,500 crore. Of this, the State stands to lose Rs 3,140 this year alone. The remaining amount would be deducted from the loan limit over the next three years.
The State suffered a revenue loss of Rs 24,000 crore this year. Kerala’s demand was that this cumulative loss should be compensated, the Minister said.
Kerala allowed to draw Rs 4,060 cr more as loan
The Centre has permitted Kerala to avail of an additional amount of Rs 4,060 crore as loan this year. The Centre had decided in October itself to sanction the amount, citing the State's good performance in the field of electricity distribution.
The Union Finance Ministry issued the order sanctioning the additional loan after the Central Ministry of Power intimated it of Kerala’s achievement.
The sanctioned amount is 0.45% of the State Gross Domestic Product.
The State had only Rs 2,000 crore more to take as loan this year. The Centre’s permission for taking Rs 4,060 crore should come as a relief to the State which had to manage the next four months of the 2022-23 fiscal year with only Rs 2,000 crore.
However, the State government is unimpressed and has taken the stand that permitting a loan of Rs 4,060 crore after cutting back its loan limits by Rs 12,500 crore would not serve to solve its financial crisis.
Last month, Kerala Finance Minister K N Balagopal wrote to Union Finance Minister Nirmala Sitharaman, pointing out that the amount had not been received.
