At pre-Budget 2018 meet, states flag drop in revenue on GST roll out

At the pre-Budget consultations of Finance Minister Arun Jaitley with state finance ministers on Thursday, ministers representing state governments run by Congress, Left parties and regional parties flagged the revenue drop faced by states after the goods and services tax (GST) roll out and flagged agrarian distress.

Bihar Deputy Chief Minister Sushil Modi, who represented the Janata Dal (United)-Bharaitya Janata Party (BJP) coalition government in his state, demanded more central assistance for key schemes and revise wages for unskilled workers under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). He suggested the Centre advance the fiscal year to start from January 1, and increase income tax exemption limit from Rs 250,000 to Rs 300,000.

Punjab Finance Minister Manpreet Singh Badal asked the Centre to announce a farm debt waiver for the entire country on the lines of the one announced by the Congress government in Punjab.

Kerala finance minister Thomas Isaac flagged the revenue drop and resource crunch that state governments have faced after the GST rollout, which has impacted the socio-economic spending capacities of states.

Isaac said the Centre has increased central excise by Rs 8 per litre on diesel between 2015 to 2017, and reduced it recently only by Rs 2 per litre. He said none of the states have substantially increased the rate of tax on diesel. Isaac said that in this context it was "unfair" on the part of the Centre to ask the states to reduce the rate of tax when most of the states were faced with financial crisis because of uncertainties related to revenue that accrued to them on the implementation of the GST. He asked the Centre to strictly implement the anti-profiteering measures in the GST. He said any effort to bring stamp duty, one of the few taxes that states can raise, under the ambit of the GST would be "unconstitutional".

Himachal Pradesh Chief Minister Jai Ram Thakur, representing the recently formed BJP government in his state, demanded that the Centre provide 100 per cent tax exemption for the first five years to industries set up in the state and 50 per cent for subsequent five years.

Thakur, who also handles the finance portfolio, also sought a 7 per cent interest subvention for a period of seven years to promote industrial development in the hill state. He suggested reduction in corporate tax rate to 20 per cent and increase in import duty on apple.

Union Finance Minister Arun Jaitley greets Himachal Pradesh Chief Minister Jai Ram Thakur during a pre-Budget meeting in New Delhi. Tamil Nadu Deputy Chief Minister O Panneerselvam and MoS for Finance Shiv Pratap Shukla are also seen shaking hands (Photo: PTI)

Punjab finance minister Badal, who has highlighted that Punjab has suffered a 40 per cent drop in revenue after GST, said the Centre should release the share of central taxes to states on a monthly instead of quarterly basis in 2018-19. He also sought restoration of central assistance to states in the Rashtriya Krishi Vikas Yojana to 90:10 ration from 60:40 to help reduce agrarian distress and help achieve Modi government's vision of doubling farm income by 2022.

Bihar Deputy CM Sushil Modi, who also handles the finance portfolio, also demanded increased central funds. He said there was a "continued reduction in the central share of some important centrally sponsored schemes", particularly Sarva Shiksha Abhiyan, National Social Assistance Programme, MGNREGA, PM Awas Yojana and Pradhan Mantri Gram Sadak Yojana.

Sushil Modi said there was "a need to revise the wages for the unskilled labourers working under MGNREGA on part of Government of India". He also said that "sufficient funds" be provided to Bihar in the upcoming Union Budget in view of the "special package of Rs 1.65 trillion" announced by Prime Minister Narendra Modi.