Telangana government has urged the Centre at the GST Council meeting on Friday to raise the Fiscal Responsibility and Budget Management (FRBM) limit from three to five per cent for borrowing purpose as the State’s revenue had dipped significantly and its expenditure shot up considerably due to COVID pandemic.
Yet, Telangana was in a better position to borrow because its fiscal deficit in the revenues for 2021-22 was expected to touch 23.10% while the aggregate average of all States put together was pegged at 36.3%.
Making the point at the meeting, Finance Minister T. Harish Rao said the State was spending heavily in public health but it was getting little assistance from the Centre. He sought liberal funding for the States as this was the last financial year for payment of compensations to them for migrating to GST regime. The funding was all the more important in view of poor financial position of State governments, he said reminding the Centre that Telangana was receiving the least compensation in the country.
Mr. Rao sought immediate release of ₹ 218 crore due to Telangana from the ₹ 13,000 crore deposited to the consolidated fund of Integrated Goods and Services Tax. The deposit to the fund was only ₹ 2,638 crore.
He also wanted representation to the State in the Group of Ministers to study tax structure for race courses since it had also one.
Mr. Rao expressed the dissatisfaction of the State to bring neutral alcohol under the purview of Centre administered GST as alcohol, petrol and diesel were the only items left to State governments to levy tax. Telangana would toe the line of all States in seeking exemption for alcohol from GST. The State governments would lose crucial revenue if alcohol was included in GST. Therefore, he urged the council to take a permanent decision to exempt neutral alcochol from GST.
Making a case for more tax avenues to the States, he reminded the Centre that it already enjoyed huge revenue from cess and surcharges on various items. In the last year’s budget, the share of cess and surcharge in Centre’s revenue was 18%. Out of a budget of ₹ 22.17 lakh crore, the Centre earned ₹ 3.99 crore only from cess and surcharge. The States forfeited 41% of their revenues, totalling ₹ 1.41 lakh crore, to cess and surcharge collected by Centre. Telangana lost ₹ 3,439 crore which was 2.102 % in this process.
