Compensate revenue deficit due to low GST collections, Rajasthan tells Centre

The Rajasthan government on Monday suggested to the Centre that in view of the weak economic situation of the states due to corona pandemic and the economic recession, the period for grant of GST compensation to the states should be increased by five years from June 2022 to June 2027.

The state government said that revenue deficit was caused because of lower than expected GST collections. The state government also demanded that the ratio of the Centre should be increased to 75 per cent in the centrally-sponsored schemes.

The state government suggested that the Union government had promised to compensate the revenue deficit due to the GST collection falling below the expected level due to the coronavirus epidemic and the economic slowdown till June 2022, which should be extended till June 2027.

Local Self Government Department Minister Shanti Dhariwal gave the suggestion in a pre-Budget consultation meeting with Union Minister of Finance Nirmala Sitharaman, who discussed the Budget for the next financial year with the finance ministers of various states.

Dhariwal said that despite limited financial resources, the Rajasthan government made every effort to combat the pandemic.

He said that in the next financial year (2021-22), the three per cent credit limit would not be sufficient for the state in view of the necessary financial resources.

Dhariwal said in the virtual meeting that the 32 per cent of the states' share in Central taxes was increased to 42 per cent but the grants and planning assistance received by the states have all been included in this 42 per cent category.

Also, the share of Central government which was 75 per cent in centrally-sponsored schemes was reduced to 50 per cent. This is putting additional financial burden on the states and hence it should be increased to 75 per cent again, he said.

Dhariwal also demanded an increase in royalty rates of minerals, which have not been increased for more than four years. He also suggested reducing import duty from 7.50 per cent to 2.50 per cent on gold and silver jewellery, precious and semi-precious jewellery made in the country.

Dhariwal demanded that looking at the drinking water needs of the state, the eastern canal project should be made a national project to enable it get budgetary provisions and support.

He also demanded that all the railway projects of the state that were approved in the past should be given priority.

He said the Rajasthan government has passed three Bills in the interest of farmers. On the same lines, three agricultural laws made by the Central government should be revisited so that dissatisfaction spread among the farmers can be put to rest.