GST: CM Pinarayi Vijayan seeks Modi’s intervention

THIRUVANANTHAPURAM: Chief minister Pinarayi Vijayan sent a letter to Prime Minister Narendra Modi, conveying the government’s concerns over the hurdles in the payment of compensation to states. Kerala has decided not to accept the Centre’s propositions for sourcing fund for the GST compensation due to the state.
“When GST was implemented with effect from July 1, 2017, it was agreed that states would be assured an annual compounded growth rate of 14% in GST revenue with 2015-16 as the base year during the initial five years. This was incorporated in the goods and services tax (compensation to states) Act 2017. Section 7 of the Act states that compensation shall be payable to states and it shall be provisionally calculated and released at the end of every two-month period. Unfortunately, since 2019-2020, this provision has not been adhered to. From April 2020, no compensation has been released to states. The amount due to Kerala from April to August in 2020-21 is Rs 7000 crore,” he said.
Vijayan said transferring the obligation of GST compensation to states through their borrowing was not in accordance with the spirit of the understanding reached between Centre and the states.
“The two borrowing options set by the ministry of finance to states go against this and need to be withdrawn. I request your good self to intervene and advise the finance ministry not to go ahead with the plans of transferring the burden of GST compensation on the states,” he said.