CM Bhupesh Baghel writes to his counterparts of 17 states discussing Centre’s ‘unfortunate’ decision to discontinue GST Compensation.

Chhattisgarh may face a loss of about Rs 5000 crore is GST compensation is stopped, said Baghel.

Opposing Central government’s move to discontinue GST compensation, Chief Minister Bhupesh Baghel has written a letter to his counterparts of 17 states raising his concern over the issue. Discussing the issue with the CMs of 17 states, Baghelmentioned in the letter about the losses all the states may face due to the Centre’s decision.  CM has written to the chief ministers of  Odisha, Madhya Pradesh, Uttar Pradesh, Gujarat, Jharkhand, Rajasthan, Punjab, Bihar, West Bengal, Haryana, Andhra Pradesh, Hyderabad, Tamil Nadu, Karnataka, Kerala, Telangana and Delhi. 

Baghel has requested his counterparts to join hands and urge the Central Government to continue the GST compensation for ten years, so that the revenue losses of the states can be prevented. Baghel also mentioned that the Centre should make an alternative arrangement if decides to discontinue GST compensation.

Baghel, in this letter has talked about three key points. The first point is that in the pre-budget meeting held under the chairmanship of the Union Finance Minister on December 29 in Delhi, Chief Ministers and state finance ministers present in this meeting expressed deep concerns over the discontinue of GST Compensation after June 2022 and Chief Ministers and Finance ministers, hoping for a positive response from the central government   had requested to extend the GST compensation for five years in the meeting itself. 

In the second key point, he discussed the issues that will be faced by manufacturing states like Chhattisgarh and Andhra Pradesh. He further said, these states will face huge financial losses if GST Compensation is discontinued.

Chhattisgarh, being a manufacturing state, contribution to the growth of the country’s economy is much higher than the consumer states which have benefited from the GST regime due to higher consumption of goods and services. There may be a loss of around Rs 5,000 crore in the coming financial year. Similarly, other states will also have less revenue receipts in the coming financial year. And this problem will make it very difficult for the states to arrange money for public interest works and development works.

The third key point is that Baghel has pointed out that after the introduction of the GST regime, the independence of the states on tax policy has been greatly reduced. Apart from commercial tax, the states are left with no option but to increase the revenue in other items of tax revenue. Therefore, in order to recover from the impact of COVID-19 on the state’s economy and get the due benefits of GST compensation, the states should request the central government to implement the continuation of this existing mechanism of compensation of GST, at least for the next 5 years. Chief Minister Mr. Bhupesh Baghel exuded confidence that the states would agree to his point of view and together would make a common request to the Center to agree on this issue.