Centre sanctions ₹2,228 cr as GST compensation to Punjab

Chandigarh:cash-strapped Punjab government got some relief on Monday with Centre’s nod to release of ₹2,228 crore as pending GST compensation.the Union finance ministry released ₹35,000 crore to the states under the said head. The said amount is one-third of what the Centre owes to Punjab, it is learnt.

However even with this money, the government is not out of the woods when it comes to its financial position as it has ₹4,000-crore power subsidy and another ₹5,900 crore against other bills to clear.

Principal secretary, finance, Anirudh Tiwari, said “they would make intelligent spending”. The release is a part of the pending GST compensation of ₹4,000 crore for the months of August and September. Same amount would be pending with the Centre by the end of the calendar year as GST compensation for October and November.

As per a recent statement by finance minister Manpreet Singh Badal, ₹ 6,100 crore was pending with the Centre and Monday’s release is only onethird of the due against GST reimbursement. Terming the situation severe, Manpreet on November 30 had announced to approach the Supreme Court if the Centre failed to release the GST arrears. A week before that, on November 24, Punjab CM Capt Amarinder Singh had written to PM Narendra Modi to intervene in the matter.

With a slide in tax collection and non-tax revenues, Punjab relies heavily on GST compensation. As per the budget estimates for year 2019-20, around ₹17,109 crore was expected to come via GST compensation.

The fiscal crunch is acute despite the fact that the state government was able to collect ₹1,325 crore against non-tax revenue of total estimated collection of ₹ 9,477 crore till September which is only 13% of the expected amount. The government managed to collect ₹18,276 crore as tax revenue in first six months (April to September) of the current financial year. The state government had pegged total collection at ₹50,993 crore under the head, in the budget statement at the onset of the current fiscal.

In the wake of the fiscal crunch, the state government had to raise loans of ₹ 600 crore to fund salary and pension bills for the month of November. The state spends ₹2,200 on paying a month’s salary and pension.

FINANCIAL SITUATION STILL CRITICAL; CENTRE TO RELEASE ONE-THIRD OF WHAT IS DUE