The Centre has not stopped any funds to the State governments, the Finance Ministry informed The Hindu on Monday adding that “in fact, [the] Central government is also facing a very difficult financial situation”.
The Ministry statement was in response to a news report — Scramble for funds as Centre tightens purse strings — published in these columns on Monday. The report said a dip in the Kerala government’s own tax revenue, coupled with a delay and cut in Central transfers, has resulted in a severe resource crunch. “A tranche of ₹1,276 crore provided by the Centre as revenue deficit grant was perhaps the only major revenue inflow into the [Kerala] treasury this month,” said the report.
Also read: The state of State finances
In its rebuttal, the Centre said it had in fact released ₹2,980.45 crore to the Kerala government during April, including ₹894.53 crore as tax devolution, ₹1,276.92 crore as post devolution revenue deficit, ₹157 crore for the State Disaster Response Mitigation Fund and GST compensation cess of ₹652 crore.
“Due dates for payment of taxes have been extended till June. Economic activity is also very low. Net tax revenue is negative [after adjusting refunds]. Still, the tax devolution to the States is made on the basis of Budgetary Estimates for the FY 2020-21,” said the Finance Ministry statement.
The Ministry said the news report incorrectly depicts the financial position of Kerala vis-a-vis Central releases, as it only mentions one of the four kinds of releases made by the Centre to it.
