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Jitters in state as PM presses for sops ahead of polls

Saturday, January 12, 2019
By A Special Correspondent

A nervous state finance department has started getting the jitters as Prime Minister Narendra Modi-led central government pressed the sops button ahead of the ensuing Lok Sabha elections to woo the electorate.

The state, which is already battling a grim drought situation, the reduction of Goods and Services Tax (GST) slabs at the recent GST Council meetings, has raised anxiety levels in the state finance ministry which is apprehensive of its long term implications on state coffers post 2022.

Recently the center has brought 25 to 30 items under 28 per cent slab, further 99 products under the 18 per cent slab and reducing GST slab on real estate sector. The worry for the state is how will it get compensated for any fall in revenue income as it grapples drought and post 2022.

Another worry for the state finance department is whether the Bharatiya Janata Party (BJP)-led government in the state follows on the footsteps of the central government and announces slew of sops, schemes and welfare measures ahead of the vote on account on February 1.

Sources disclosed that the state finance department has been keeping a close watch on the revenue income and expenditure graph of the state. Speaking to newspersons on conditions of anonymity here yesterday a senior finance department allayed fears of any loss of revenue on account of recent reductions in GST slabs. The official added that despite the advent of GST and subsequent drought conditions the state had managed to present a Rs 2,083 crore revenue surplus budget last year.

The official argued that in the transition period of five years the center is to compensate the states for any dip in revenue income after the expiry of the first five years. The center will take into consideration the best of five highest revenue earnings of the state while considering the compensation amount post 2022.

Over the years the major source of revenue income for the state has been the corporate tax, real estate, profession tax and other taxes on luxury items. The state is now caught in a fiscal bind as it grapples drought on one hand and worries of fall in revenue income on account of reductions in GST slabs on some commodities.

The official further disclosed that the center is yet to approve of the Rs 8,000 crore drought relief package that it had sent. To make matters worse for the state it now cannot tap into reserve corpus funds of state-run corporations like MMRDA, MSRDC or MHADA as most of them have invested those reserve funds into projects like Metro rail, Samruddhi Mahamarg or low cost housing projects. Right now the state is shelling out drought relief aid and loan waiver payments out of its own coffers even as the center is yet to approve its aid package.

If the center is to present a vote on account for the next four months on February 1, the state will follow suit in presenting its vote on account on February 27. Sources disclosed that Minister for Finance and Planning Sudhir Mungantiwar, does strongly believe in numerology and finds number nine as auspicious.

Sources further disclosed that the state earlier had wanted to present a budget for seven months up to August. However, with the center saying a firm no, the state government had to settle for a vote on account. Sources in the finance ministry pointed out that many central schemes and projects have state's share component for which the state has to make allocations in its state budget. Moreover, being an interim or vote on account the state cannot make allocations or announce any new schemes, sops or welfare measures of its own.

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