Last year, the Center borrowed Rs 1.1 lakh crore under a special RBI window and transferred the amount to the states and UT as consecutive loans to make up its GST income shortfall.
West Bengal Finance Minister Amit Mitra on Friday expressed strong reservations against the Center’s decision to link half of the additional debt space of 1% of GDP granted to states in the current fiscal in the face of the pandemic of Covid-19 to capital spending targets. even as he reiterated the demand that Covid-related items have a zero rate, at least for a fixed period of time.
In a letter addressed to the Union’s finance minister, Nirmala Sitharaman, Mitra urged her to allow states to borrow up to 5% of the GSDP in fiscal year 22 without conditions.
For the current financial year, the Center has set the annual debt limit of the states at 4% of the GSDP (compared to the usual 3%), of which only 3.5% is unconditional and 0.5% is linked to capital spending targets. Last year, of a total debt space of 5% granted to the states, 4% was unconditional and the balance was conditional on certain achievements, including specific reforms. The window was used by most states, but not to its full extent.
Mitra wrote: “It amazes me that after a year like 2020-21, where revenues plummeted across the nation and our state was hit by the twin disasters of Covid and Cyclone Amphan, our capital spending is expected to not It is only up and running again, but it increased by more than 100% from 2019-20 (from Rs 15,970 crore to over Rs 34,000 crore this year). He added: “You will agree that right now, we must focus on the rehabilitation of those severely affected by natural calamities and on universal vaccination and other effective measures to fight Covid. These are sure to greatly affect our ability to spend on capital expenditures in these dangerous times. ‘
Mitra demanded that the Center make good GST compensation to the states for the period from April 2020 to January 2021 estimated at Rs 63,000 crore, including Rs 4,911 crore for West Bengal. He estimated the gap (the states GST revenue shortfall will likely not be surpassed by kitty cess) for the current fiscal year at Rs 2.13 lakh crore, compared to Rs 1.58 lakh crore announced by Sitharaman after the 43rd meeting of the GST Council.
Last year, the Center borrowed Rs 1.1 lakh crore under a special RBI window and transferred the amount to the states and UT as consecutive loans to make up its GST income shortfall.
The last meeting of the Council had established a group of state finance ministers to make recommendations to it on the taxation of Covid-related items, including vaccines. The Center appears to be of the view that tax concessions on vaccines are redundant, as vaccines are made available to people free of charge through government channels, while there is no guarantee that the private sector will transfer tax reductions to the intended beneficiaries. .
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