TN Guv's address picks holes in Centre's GST fund allocation

Governor Banwarilal Purohit on Monday picked holes in the 14th Finance Commission's devolution formula to say that it resulted in a net loss of Rs 4,073 crore to Tamil Nadu and urged the Centre to release that sum.

In his address to the Assembly, Purohit said there has been a diminution in the overall flow of Central funds to Tamil Nadu, adding that the State faced a very severe adverse impact due to the horizontal distribution formula of the 14th Finance Commission.

The State eagerly awaited the 15th Finance Commission recommendations and the government "is hopeful of a fair and equitable distribution of resources, which rewards efficiency and performance," he said.

This year, Tamil Nadu has so far received Rs 7,096 crore as GST compensation and Central grants of Rs 17,957.31 crore.

However, a few outstanding issues in the release of dues to Tamil Nadu were being followed up closely, he said.

Citing the GST, he said in 2017-18, the first year of its implementation, instead of distributing 50 per cent of the unallocated IGST (Integrated Goods and Services Tax) in proportion to SGST (State Goods and Services Tax) collection in various States, the Centre "incorrectly" handled it.

"The Government of India incorrectly appropriated the entire unallocated portion of IGST to the tune of Rs 88,344.22 crore to the Consolidated Fund of India and distributed 42 per cent of this to States as per the 14th Finance Commission's devolution formula," he said.

Such a handling "resulted in a net loss of Rs 4,073 crore to Tamil Nadu and we are insisting on the immediate release of this amount due to our State."
The issue has been referred to the Group of Ministers by the GST Council and "we seek an early favourable decision."
The government repeatedly raised such issues with the Centre in multiple fora and at the highest level, he said, adding, "I once again urge the government of India to settle the dues of Tamil Nadu at the earliest."
"I request the Union government to announce a special financial package to assist the revival of the sugar sector in Tamil Nadu."