Centre giving 107 per cent of gross tax revenue to states: Finance Minister

Our Bureau New Delhi | Updated on September 18, 2020 Published on September 18, 2020

Responding to the debate on supplementary demand for grants she said gross tax revenue had declined by 30 per cent in the April-July period

The Centre is giving the states Rs 107 against its earning of Rs 100 during the current fiscal, Finance Minister Nirmala Sitharaman said on Friday. She said the GST Council will take a final decision on bridging the compensation shortfall.

On her remarks about the pandemic being an Act of God, she said, it was a ‘simple expression that would be used by a housewife or neighborhood aunty’ and it was preferable to using an expression like ‘force majeure’.

Responding to over four hours of debate on the first Supplementary Demands for Grants in the Lok Sabha on Friday, she said the total transfer, tax devolution plus grants, during the current fiscal was 19 per cent higher than that in the last fiscal.

Read also: GST compensation: AP, Odisha join 11 other States to go for borrowing

“In-fact 107 per cent of Central Gross Tax Revenue has been given to States,” she said. This means the balance 7 per cent was being given through borrowing and even the Centre is using borrowed funds to meet its expenditure. It may be noted that the Centre initially decided to borrow Rs 7.8 lakh crore, but later due to lower tax revenue and higher expenditure on account of Covid, the borrowing was hiked by Rs 4.2 lakh crore, making a total of Rs 12 lakh crore.

Gross tax revenue declines 30 per cent

The Finance Minister informed the house that during the April-July period this fiscal, the gross tax revenue fell to Rs 3.80 lakh crore as against Rs 5.39 lakh crore in the corresponding period last fiscal. This was a decline of nearly 29.5 per cent. However, devolution was down by nearly 12 per cent, which means a sum of Rs 1.76 lakh crore transferred as against Rs 1.99 lakh crore. She made it clear that no state can complain of not getting money as despite all these problems, devolution was being completed by the 20th of every month.

She admitted that the first batch of Supplementary Demands for Grants of Rs 2.35 lakh crore is probably one of the highest amounts. Of this, Rs 1.66 lakh crore is the net cash outgo or fresh expenditure, with remaining amount to be met through savings and recoveries of various departments. “Additional expenditure is largely towards people centric activities,” she said while highlighting additional allocation of Rs 40,000 crore towards the Mahatma Gandhi National Rural Employment Guarantee Programme (MGNREGRA). With this, the total allocation for the scheme has crossed Rs 1 lakh crore for the first time.

“Launching a programme is one thing, but using it in an emergency situation effectively and money being transferred directly into the beneficiary account is more important,” she said responding to repeated allegations about the BJP’s criticism of the scheme when it was in the opposition. The Minister said the scheme was marred by ghost beneficiaries during the UPA regime and that was highlighted in the Comptroller and Auditor General (CAG) report, too.

She said during the UPA regime there was wide gap between budget allocation and actual usages. For example, while BE was Rs 39,100 crore during 2009-10 (year after global economic crisis), the actual expenditure was a little over Rs 33,500 cr. For 2010-11, it was Rs 40,000 crore vs Rs 35,000 crore, for 2011-12, Rs 40,000 crore vs Rs 29,215 crore and for 2012-13, it was Rs 33,000 crore vs Rs 30,000 crore.

However, the situation had changed during the Modi regime. The Budget estimate in 2015-16 was Rs 34,699 crore, while the actual expenditure was Rs 37,000 crore. Similarly, in 2017-18, it was Rs 48,000 crore vs Rs 55,500 crore, in 2018-19, BE was 55,000 crore vs Rs 61,800 crore, in 2019-20, Rs 60,000 crore vs Rs 71,000 crore and now in the current fiscal as against a budget estimate of Rs 61,500 crore, actual expenditure is expected to go beyond Rs 1 lakh crore.

She assured the house that the GST Council will take a final call on what needs to be done to bridge the compensation shortfall. It will discuss about States that have not given their choice of borrowing to meet the shortfall. However, one thing is clear, “There is no provision to give money from the Consolidated Fund of India,” she said.

The Lok Sabha later approved the first batch of Supplementary Demands for Grants.

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Published on September 18, 2020
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