Extend GST compensation beyond 2022: Ktaka CM

Karnataka Chief Minister H D Kumaraswamy Saturday asked the Centre to extend GST compensation beyond five years, saying that the state will face "severe financial crunch" after the recompense period ends in 2022.

He was speaking at the first meeting of the Governing Council of Niti Aayog chaired by Prime Minister Narendra Modi here.

While implementing the Goods and Services Tax (GST), the Centre had assured the states to compensate them for loss of their revenue for five years till 2022.

"While the revenue gap is being bridged by the assured compensation till 2022, the state has limited scope to mobilise additional revenue thereafter," Kumaraswamay said.

It is evident that at the end of 2022-23, there would be a steep fall in revenues of the state as compared to the protected revenue of 2021-22 which would have accrued to the state due to the constitutionally guaranteed compensation, he said.

"This would adversely impact developmental and other infrastructural projects implemented in the state as well as committed expenditure of the state government.

"Thus, in case this revenue gap is not bridged in the coming years despite all compliance efforts, adequate compensation, in the manner as envisaged in the Compensation Act, should be extended beyond 2022," he added.

Stating that Karnataka is the most arid state in the country after Rajasthan, the Chief Minister said the state "faces serious drinking water challenges. Ground water table is depleting and ground water sources are getting contaminated."