GST Implemented In A Hurry, Hurting States: Amarinder Singh

The goods and services tax was rolled out in a haste and it’s hurting states, according to Punjab Chief Minister Amarinder Singh.

The central government should take steps to make sure that the states don’t suffer, he told BloombergQuint in an interview. “They must have emergent measures.”

Singh said Punjab was facing a revenue shortage to implement social sector projects. “When states handed over their powers to the central government through GST, then states should have the money available when they need it, that is once a month, and not bimonthly or quarterly,” Singh said.

Under the GST regime, states get compensated for the losses they incur in the first five years of implementation of GST at a 14 percent growth rate, keeping 2015-16 as the base. This compensation is paid once in two months.

Singh said if the central government asks the 15th Finance Commission to squeeze devolution to states from the central taxes, it would become difficult for states to function. Currently, according to the recommendations of 14th Finance Commission, states get 42 percent share of the centre’s revenue.

The Finance Commission is expected to create a defence and internal security fund, likely to be called Rashtriya Suraksha Nidhi, by setting aside money from gross tax revenues of the central government, according to a report in The Economic Times. The central government wants states to share the financial burden of maintaining and upgrading its security systems.

“How will the states contribute?” Singh asked. “We have no money.”

Watch the full interview here: