West Bengal seeks 5% of GSDP borrowing space sans conditions, more funds as compensation

Final 12 months, the Centre borrowed Rs 1.1 lakh crore underneath particular RBI window and transferred the quantity to states and UTs as back-to-back loans to make good their GST income shortfall.

West Bengal finance minister Amit Mitra on Friday expressed sturdy reservations towards the Centre’s choice to hyperlink half of the additional borrowing house of 1% of GDP being given to states within the present fiscal within the face of the Covid-19 pandemic to capital expenditure targets, whilst he reiterated the demand that Covid associated gadgets be zero-rated, at the very least for a set time frame.

In a letter to Union finance minister Nirmala Sitharaman, Mitra urged her to permit states to borrow as much as 5% of GSDP in FY22 with out situations.

For the present monetary 12 months, states’ annual borrowing restrict has been fastened by the Centre at 4% of GSDP (as towards customary 3%), out of which solely 3.5% is unconditional and 0.5% is linked to capital expenditure targets. Final 12 months, of a complete borrowing house of 5% accorded to states, 4% was unconditional and the steadiness was conditional on sure achievements, together with specified reforms. The window was utilised by most states, however to not the complete extent.

Mitra wrote: “I’m stunned that after a 12 months like 2020-21, the place income plummeted in the whole nation and our state was hit with twin disasters of Covid and cyclone Amphan, it’s being anticipated that our capital expenditure wouldn’t solely be again on monitor, however enhance by greater than 100% since 2019-20 (from Rs 15,970 crore to greater than Rs 34,000 crore this 12 months).” He added: “You’ll agree that proper now, we have to think about rehabilitation of these badly affected by pure calamities and on common vaccination and different efficient Covid combating measures. These are certain to take an enormous toll on our capability to spend on capital expenditure, at these hazardous occasions.”

Mitra demanded that the Centre make good GST compensation to the states for the interval from April, 2020 to January, 2021 estimated at Rs 63,000 crore, together with Rs 4,911 crore for West Bengal. He estimated hole (states’ GST income shortfall more likely to be unbridged by the cess kitty) for the present fiscal 12 months at Rs 2.13 lakh crore, as towards Rs 1.58 lakh crore introduced by Sitharaman after the forty third GST Council assembly.

Final 12 months, the Centre borrowed Rs 1.1 lakh crore underneath particular RBI window and transferred the quantity to states and UTs as back-to-back loans to make good their GST income shortfall.

The final Council assembly had arrange a bunch of state finance ministers to make suggestions to it on the taxation of Covid-related gadgets, together with vaccines. The Centre is seemingly of the view that tax concessions on vaccines are redundant, on condition that these are made accessible freed from price to the folks by way of the federal government channels whereas there isn’t any assure that the personal sector will go on the tax reliefs to the meant beneficiaries.