In bridging the GST gap, the Centre ought to help States through the Consolidated Fund of India. Elaborate (200 Words)
Refer - The Hindu
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
The Goods and Services Tax (GST) regime was built on the promise that if States faced revenue deficits after the GST’s introduction, the Centre would make good the loss in the first five years.
Assurances made
· When the government introduced the GST compensation cess, many States pointed out that proceeds from the cess may be inadequate to fund the losses faced by States after the rollout of GST. Allaying these apprehensions, the central government made the assurance that it would provide funds to meet States’ deficits.
· This was reinforced in the eight meeting of the Council. In the tenth meeting, the Secretary of the GST Council stated that the central government could raise resources by other means for compensation and this could then be recouped by continuing the cess beyond five years.
· States never expected to be disappointed so early. The central government has let them down by thrusting on them two options, both of which involve borrowing by States. This is akin to asking States to mortgage their future to sustain the present. Cooperative federalism has been transformed into coercive federalism.
Centre is best placed
· The central government has the ability to raise resources through means that are not available to States. Monetary measures are the monopoly of the central government. Even borrowing is more efficient and less expensive if it is undertaken by the Central government.
· Over the last six years, the Centre has continually cornered resources that should have been shared with States. The Fourteenth Finance Commission allotted 42% of central government tax revenues to States. However, Accountability Initiative’s analysis of State Budgets shows that States received only 30%of central tax collections during the 2015-19 period.
Equal representatives
· As equal representatives of the citizens of the federal republic of India, State governments expected the Centre to demonstrate empathy when they are bearing the brunt of the COVID-19 pandemic and lockdowns that were announced without consultation. This is the most appropriate time to provide them relief through the Consolidated Fund of India.
· Prime Minister proudly described GST as a ‘Good and Simple Tax’ which would usher in a glorious economic future for India. Unfortunately, just three years later, the harsh reality is that States are staring at ‘grave and sordid times’ ahead.
K. V. A 4 years
Pls review
