“Extend Period of Compensation by Five Years”

In 2015, K.N. Balagopal, then a Rajya Sabha member, had submitted a dissent note, flagging concerns over fiscal federalism, against the GST Bill as a member of the Select Committee. Six years on, as Kerala Finance Minister, he feels his fears were not misplaced. In an interaction with Joe C. Mathew, he calls for an overhaul of the GST system

On need to review the role of GST Implementation Committee

It is not only the structure of the GST Council that needs to be reviewed. It is time to discuss the impact of the GST system on economy of the country and revenues of states. I was among the few who had issued a dissent note on risks associated with Centre having an absolute say in decision-making and states losing their financial independence. Several states are recognising this threat.

Are you suggesting an overhaul of the whole system?

Let there be discussion first. If states become mere fund distributors, we will be heading towards a major crisis. A discussion is also needed because 18 per cent of central government income is coming from cess which is not distributed (among states).

On extension of compensation period

Centre should take the pandemic-led disruption into consideration and extend the period of compensation by five years.

Will this get support from all states across party line?

It should. There has to be some consensus over Centre-State relationship. States will have to be given some financial autonomy.