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The upcoming Union Budget, the first full-fledged one from the Narendra Modi-led Government, should focus on ramping up infrastructure spend to boost the sagging economy, State Finance Ministers told the Centre on Friday. They also demanded complete consensus on the Goods & Services Tax (GST) issue before its rollout from April 1, 2016.
In pre-Budget consultations with Union Finance Minister Arun Jaitley, the State Finance Ministers also sought funds at affordable rates to so that the States can increase spending on infrastructure.
There was a lot of discussion on infrastructure during today’s consultations, Jaitley told reporters after the three-hour-long meeting.
“Some States even went to the extent of saying that FRBM (Fiscal Responsibility and Budget Management Act) limit be raised this year to improve liquidity in the market,” he said.
Several States also wanted decentralisation of the Centrally-sponsored schemes to customise them to their requirements. In his address at the meeting, Tamil Nadu Chief Minister O Panneerselvam opposed the hasty introduction of the Constitution Amendment Bill (for GST), as it could have “serious long-term implications” on the fiscal autonomy and revenue of States.
The Centre’s move to introduce the Bill in the Lok Sabha without evolving consensus on crucial issues like revenue neutral rates, compensation methodology threshold is “not acceptable”, he said, adding that the Centre must ensure true consensus before attempting such a far-reaching reform.
Kerala said it should be exempted from Central Sales Tax (CST) on raw material used to export goods.
“…it is requested that CST may be exempted on the raw material or the input products used in the export of the State,” Finance Minister KM Mani said in his speech, urging Jaitley to ensure deliberations with every State before taking decisions on changes under the GST. The Gujarat government wanted the additional 1 per cent tax above the rates prescribed in the proposed GST to be continued as long as the States wanted it.
“As we move closer to the GST regime, finances of manufacturing and net producing States would come under strain, particularly in the initial years,” Gujarat Finance Minister Saurabhbhai Patel said at the meeting.
He also demanded a hike in the minimum support price for cotton.
Andhra Pradesh and Telangana governments pitched for more Central support in the wake of the reorganisation of these States.
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