GST a blunder, Time for damage control: KN Balagopal, Kerala FM.

GST compensation for five years, beyond July 2022, Kerala Finance Minister. 

Mr Balagopal, Kerala finance minister ” Cooperative federalism is at stake. GST hasn’t yielded the promised revenue productivity. Let us at least learn from experience and restructure the tax. There are also genuine concerns over the (lack of) democratic functioning of the GST Council. It is up to the Union government to display statesmanship and remedy the damage caused by GST to states’ finances and fiscal powers,” told the Financial Express. A contrasting concept to federalism is Goods and Services Tax(GST) said Balagopal, raising his voice in addition to the other finance ministers and public policy experts against four-year-old tax. GST a blunder, Time for damage control: KN Balagopal, Kerala FM.

Due to the series of events like the floods in 2018 and the prevailing pandemic after the imposition of the nearly half a decade old taxing, Kerala with an honourable track record was virtually derailed in its sincere effort to address issues concerning education, healthcare.

Mr Balagopal further added that” The Centre must desist from assuming a great role than envisaged in the Constitution… if the Centre walks the talk on its assurances and goes by the constitutional division of powers between it and the states, then Kerala will confidently grow out of the current crisis and make further progress on the path of sustainable, multifaceted development,”

The first time finance minister was more restrained than West Bengal’s FM Amit Mitra or Punja’s Manpreet Singh Badal, who has not yet opposed the council’s GST functioning.

“I think it is incumbent on the Union government to instil confidence among all members of the GST Council that a truly democratic spirit will govern the council’s functioning. Decision-making should be through consensus and the process should look convincing to all. There is a feeling that when it comes to fiscal matters, the Centre’s powers are rising. This must be checked. All stakeholders in the council must feel that justice prevails and is being delivered to them.” he said.

 “As we control Covid-19 sooner than others, we will likely get a head start and economic activities including tourism will get a fillip. Income transfers to the people who lost livelihoods due to Covid-19 – Rs 8,900 crore in the current fiscal; interest subsidy on loans routed via cooperatives to farm sector & MSMEs (Rs 8,300 crore) and sustained momentum in public funding of infrastructure would help spur consumption”, Mr Bajagopal said. He added that lucrative spending on health care would give a head start in economical growth.

The finance minister said that his state would object subsume sales taxes or VAT on petrol and diesel. As few other states have witnessed their economic growth in the past few years, he said it was reasonable to extend the GST compensation for five years beyond July 2022.

The revenue deficit of Kerala has been highest among other states owing to its liberal spending on welfare and high routine expenses. The minister also added that the state has excelled in population control and instead of rewarding, they were being punished.

The inevitable is borrowing large funds for the economy and to provide relief for the people. A few conditions to the borrowing entails the state acquiring the liabilities of the electricity board in power reformation, the minister explained.   




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