Ensure states get GST compensation due fully this year itself: Tamil Nadu CM Palaniswamy to PM Modi

In a Demi-Official letter to Modi, copies of which were released to the media here. He said so far, no compensation has been released for the shortfalls in revenue collection since April one.

'As on date, a total sum of Rs 12,250.50 crores is due to Tamil Nadu as compensation for shortfall in GST collections, of which Rs 11,459.37 crores has accrued from April to July, 2020', he said, adding, the States have suffered a severe loss in revenue in view of the COVID-19 pandemic.

Observing that state governments were in immediate need of resources, he requested Modi to direct the Finance Ministry to agree to a mechanism in which the Centre raises the required funds as a loan and lends it to the GST Compensation Fund against future cess receipts, so that the GST compensation could be paid in full to the States in 2020-2021.

He also urged Modi to ensure that the states get their full dues of the compensation in the current year itself and reduce neither the compensation payable nor the already announced and committed additional borrowing permissible to States of two per cent of GSDP under the AtmaNirbhar Bharat stimulus package in any circumstances.

He also demanded a formal and categorical assurance that any spillover of the compensation due will be paid in the period after March 31, 2022, besides relaxing the conditionalities attached to the permission to be accorded by the Centre to States to borrow under the AtmaNirbhar Bharat scheme.

Palaniswami said these measures will ensure that not only were states treated justly and fairly in the matter of being provided the due compensation for the revenue shortfall post implementation of GST, but would also have adequate funds in 2020-21 to meet their essential expenditure commitments, and could effectively contribute to the revival of the economy.