States seek a raise in central taxes, call for extending GST compensation

The states on Sunday used the forum of the governing council of NITI Aayog to raise the issue of their dwindling resources. They demanded that the Centre increase their share in central taxes and extend goods and services tax (GST) compensation to them. he council meeting, chaired by Prime Minister Narendra Modi, was, however, boycotted by Telangana chief minister K Chandrashekar Rao (KCR). This move by KCR was a “mark of protest” against the NDA government for not giving states the “flexibility to design and modify schemes based on their needs.” ITI Aayog is mandated to boost cooperative federalism in the country ihar chief minister Nitish Kumar, who runs the NDA government in the state, also did not come to the meeting citing health reasons owever, West Bengal chief minister Mamata Banerjee, a critic of the Modi government, joined after successive boycotts in the past.

Banerjee emphasised that the Centre should look into the demands of state governments “more seriously.” She also said that no policies should be forced on them. “The Chhattisgarh chief minister (Bhupesh Baghel) demanded an increase in the state share in central taxes, citing that the burden on the resources of states has been rising,” an official said in a statement. Baghel sought a five-year extension for the GST compensation to the state beyond June 2022. He said that the state was facing a revenue shortfall due to the new tax mechanism, the official added. The chief minister also urged the Centre to revise the royalty rate for major minerals, including coal, he said. According to the statement, Baghel sought a refund of the money deposited by the state government towards the National Pension System (NPS) since November 2004 along with accruals in the interest of government employees.

The Centre was asked to reimburse to the state ~12,000 crore spent on central security forces deployed for tackling the Maoist menace in Chhattisgarh. Apart from this, Baghel requested the Centre to expand the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme in rural areas. These are for areas located near cities and towns with a population of less than 20,000, it added. Sources said other states also raised issues related to inadequate devolution of funds and lack of resources. These complaints were taken note by NITI. Kerala chief minister Pinarayi Vijayan said the Centre should not go against the federal structure of the Constitution. It should legislate on subjects listed in its concurrent list in consultation with states. Earlier Kerala finance minister K N Balagopal had accused the Centre of violating the Constitution by factoring in borrowings by state entities and public account liability while fixing borrowing limits of states. New NITI Aayog chief executive officer (CEO) Parameshwar Iyer said the West Bengal chief minister raised several issues pertaining to her state. According to him, Banerjee said her state will come forward in making G20 a big success and realise its full potential. Odisha chief minister Naveen Patnaik said NITI Aayog can take up the role of an ombudsman. It can resolve disputes between states and the Centre in the implementation of central schemes. Patnaik said, “We all accept that the state and central governments are political entities and sometimes there are disputes in the implementation of central schemes. NITI Aayog can resolve these issues like an ombudsman.” He added that Odisha has been historically neglected in the subjects that are on the central list such as telecom, railways and banking. “We have the lowest density in crucial infrastructure and I would urge the central government to give special focus to Odisha,” Patnaik said. Punjab CM Bhagwant Mann said in a tweet that he espoused the case of food growers by underlining the need for making MSP a legal guarantee and ensuring a foolproof marketing system for alternative crops.

-Business Standard, 8th August 2022

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