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Finance Minister Arun Jaitley on Wednesday promised payment of ₹11,000 crore this fiscal year to States as partial compensation for the losses suffered due to reduction in central sales tax (CST).
The Minister’s assurance in the Lok Sabha comes ahead of his meeting with State Finance Ministers on Thursday as part of the Centre’s efforts to build a consensus on implementation of a dual-GST from April 1, 2016.
The move is significant as it could to a large extent bridge the current trust deficit between the States and the Centre on implementation of a Goods and Services Tax (GST).
The Centre’s dithering on payment of promised CST-related compensation from 2010 onwards had upset several States. Jaitley said most Chief Ministers he has met since May had said they don’t trust the Centre given its track record on the CST compensation issue. The total dues from the Centre towards CST compensation are estimated to be about ₹33,000 crore.
“I stand by my commitment made to the States in July this year. We will pay ₹11,000 crore (one-third of the outstanding CST compensation) this year itself. I hope my revenues will grow to help me afford this payout by March 2015,” he told the Lok Sabha in reply to the discussions on the first Supplementary Demand for Grants for 2014-15.
The Lok Sabha later passed the first batch of supplementary demands for grants, which involve an additional spend of ₹12,500 crore, but an actual outgo of just ₹500 crore.
“If you look at the last three or four years, the additional spend request of ₹12,500 crore involving cash outgo of just ₹500 crore is the lowest,” he said.
This is because the current Government won’t indulge in the practice of providing abnormally low amounts as Budget provision and then later come up with huge additional expenditure demand during the year, he added.
Legacy issues Jaitley said the previous UPA regime had created problems in coal, taxation and natural gas pricing and the new dispensation now had to sort them out.
“The retrospective (tax) legislation had brought a bad name to the country (India). We had to moderate the fear of retrospective legislation,” he said.
The Finance Minister also expressed confidence that the Indian economy would comfortably grow between 5.4-5.9 per cent this fiscal year, as projected earlier.
Srivats.kr@thehindu.co.in
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