It’s embarrassing to come & ask for money, 6 states finance ministers tell Union FM Nirmala Sitharaman

In a meeting with Union Finance minister Nirmala Sitharaman, Finance Ministers from Kerala, Rajasthan, Punjab, Madhya Pradesh, Chhattisgarh, and Delhi said, “It is embarrassing to come and ask for money.”

The finance ministers of six states met the Union Finance Minister over the delayed transfer of compensation for the losses incurred by the implementation of the Goods and Services Tax (GST) in 2017.

Under the Constitution Amendment Bill, states have been guaranteed compensation for a period of five years to offset the shortfall in tax revenue, after GST subsumed 17 central and state levies.

The Congress had raised concerns over this issue in the Rajya Sabha last week. Congress said that a continued delay in payments to states could result in salaries not being paid on time and stoppage of development work.

"We had an open and frank discussion with the Union Finance Minister over unreleased compensation (August and September) for states. The question also includes compensation for the next two months... so it is up to November. We are facing issues... can't close jails, schools and hospitals. We need to pay pensions... states have many responsibilities," said Manpreet Singh Badal, Punjab Finance Minister to reporters after the meeting.

"We can't come to Delhi every day... don't feel good and we feel embarrassed. Those who ask for money are not taken seriously...Government of India is under obligation to pay," he said. He added Union Finance Minister Nirmala Sitharaman had assured the states that funds would be released as soon as possible.

Goods and Services Tax comprises nearly 60 per cent of tax revenues of states. Several states are already facing deficits up to 50 per cent of the total GST. As a result, states are facing acute pressure on fiscals with some already resorting to overdrafts.

The Centre announced earlier this week that GST collection stood at ₹1.03 lakh crores for the month of November. This showed that for the eighth time since GST was launched, the collections crossed the ₹1 lakh crore mark. State GST contribution was ₹27,144 crore.

Manish Sisodia, Finance Minister of Delhi, said there was an estimated ₹50,000 crore waiting to be distributed. He said they had not offered explanations why it had not been disbursed.

"Money from cess is ₹50,000 crore and it is there... don't know why it has not been given. Finance Minister has not said why. In past three months Delhi is due ₹3,600 crore and bigger states are due more," he said,

The six Finance Ministers who met Sitharaman said that while they were not given a timeline regarding the release of funds, the finance minister did assure them that action would be taken.