Finance Minister T Harish Rao participates in the 40th GST Council meeting

The Union government has agreed to the long-standing demand of the Telangana government to reverse the IGST funds of Rs 1.76 lakh crore from the Consolidated Fund of India for disbursement to the States.

Finance Minister T Harish Rao, participating in the 40th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman on Friday, appreciated the Centre’s move and sought immediate release of the State’s pending share of Rs 2,800 crore from the IGST funds.

The Centre, following mounting pressure to reverse the IGST funds from the Consolidated Fund of India since 2017, had appointed a Group of Ministers to look into the demand which came up with a favourable response.

Harish also urged the Union Finance Minister to release the GST compensation of Rs 3,975 crore to the State for April and May that would help in bridging the severe revenue shortfall due to the lockdown.

Speaking at the first GSTC meeting since the implementation of the lockdown via video conferencing, he said that any shortfall in the release of GST compensation would adversely affect many programmes being implemented by the State. “Telangana is a progressive State and has been implementing many developmental and welfare initiatives,” he said.

Harish pointed out that the assured GST revenue with a growth of 14 per cent was taken into the budget as it was promised by the Centre. “Any failure in fulfilling this assurance will lead to the non-implementation of several welfare programmes,” he



said.

The Minister said there was a slump in revenue in other sectors also and in such a situation, any failure to release the compensation would aggravate the economic crisis. “The State is able to pay only part of the salaries to its employees due to lack of funds,” Harish explained. He suggested that the GST Council borrow — to meet the commitment given by the Centre — for paying the compensation to the States, if necessary, by amending the provisions of the Act.

Further, Harish said Telangana being a progressive State, it had performed well on the revenue front and was one of the few States which had taken little GST compensation from the Centre since the introduction of the GST regime in July 2017. “When the need arises and the Centre fails to fulfil its obligation, it will be very disappointing for the State,” he said.

Urging the Centre to release the devolution of funds for June 2020, Harish said that the State was also not receiving any revenue on account of revenue deficit and that the 15th Finance Commission was also not favouring the State. “It has reduced the State’s share in devolution,” he pointed out.

He said the State under the dynamic leadership of Chief Minister K Chandrashekhar Rao had stood first in the country barring a few North Eastern States in the revenue performance by recording least revenue gap of 11.5 per cent for 2019-20. Telangana achieved the highest revenues since the GST implementation and did not take any compensation during 2017-18 and in 2018-2019.