Rajasthan Chief Minister Ashok Gehlot has written a letter to Prime Minister Narendra Modi demanding that the GST compensation to states be given for five more years. The compensation should be provided for the total revenue deficit of the state, the letter states.
Gehlot also demanded that given the economic situation arising due to the COVID pandemic, the state should be allowed additional borrowing during the next financial year as well.
In the letter written before the upcoming Union Budget 2021-22, the CM also drew the Prime Minister’s attention to the critical issue related to the economy and said the COVID pandemic has negatively impacted the state’s economy.
Though the economic activities have resumed after the end of nationwide lockdown and lifting of many other restrictions, “they are far from reaching the normal levels.” he said in the letter.
Gehlot told Modi that looking at the prevailing situation, the period for which the Centre provides GST compensation to the states up to June 2022 should be extended by five more years and this compensation should be given up to June 2027.
He further reiterated that the earlier demand to provide GST compensation to the states for the total revenue deficit rather than bifurcating it on certain grounds.
What else Ashok Gehlot wrote
Ashok Gehlot wrote that given the situation arising out of COVID, Rajasthan availed additional borrowing to the tune of 2% of state GDP in the current financial year.
To enable the state government to take care of the resource envelope required for committed liabilities, he requested that a similar provision of 2% additional borrowing should be made available in the next financial year as well.
He said the negative impact of COVID on the economy would cause continued stunted growth. As a result, the expected growth in GDP would not be achieved and the revenue streams of the state would not also reach the desired levels.
Therefore, Ashok Gehlot suggested that positive interventions from the Centre were urgently required in the upcoming Union Budget.