State GST revenue deficit at 13%: Finance Minister Arun Jaitley

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The total state GST revenue in the first five months of 2018-19 saw a deficit of 13 per cent as against 16 per cent in 2017-18. This was announced by Finance Minister Arun Jaitley in a press briefing after the 30th GST Council meeting in Delhi. Jaitley said that almost all states have shown improvement in the revenue collection in the past one year and have seen their deficit coming down.  As many as 6 states have shown a surplus collection. These include five states from North East and Andhra Pradesh. Mizoram has witnessed a 50 per cent revenue surplus while Andhra has seen 1 per cent revenue surplus.

Of the states which have witnessed deficit in GST revenue collection, seven states-Telangana (2 per cent), Maharashtra (4per cent), UP and Tamil Nadu (5 per cent each), Assam (6 per cent), West Bengal (7 per cent) and Rajasthan (12 per cent),  have seen a deficit lower than the national average. States like Gujarat (14 per cent), Haryana (15 per cent), Meghalaya (14 per cent), MP (16 per cent), Jharkhand, Kerala and Tripura (17 per cent each) and Delhi (19 per cent) have a deficit more than the national average but less than 20 per cent deficit, which was witnessed by 10 states. Uttarakhand, Himachal, Punjab and Pudducherry have seen over 35 per cent deficit in GST collection.

The deficit has been calculated based on 14 per cent annual revenue growth over the past two years with 2015-16 revenue as base. To find the reasons for deficit, Revenue Secretary was sent to six states showing large revenue deficit. Sources said one of the reasons for some of the states showing large revenue deficit is their over dependence on certain state specific taxes which have now been subsumed in the GST. For example, in case of Punjab, 20 per cent of its 2015-16 revenue came from Agriculture Purchase tax and Infrastructure development tax. This got subsumed in GST and hence the wide difference in GST collection.

In Pudducherry, for example, they were over-reliant on central sales tax. While the average contribution of CST to state tax collection was 8 per cent, in case of Pudducherry it was 27 per cent. A finance ministry source said that these states would have to come out with ways to narrow the deficit because for the first five year the central government would compensate for the deficit but after the fifth year they are on their own. Meanwhile on the subject of the calamity cess, the GST Council has decided to constitute a group of minister to look into the issue.

Read More at: https://www.businesstoday.in/current/economy-politics/state-gst-revenue-deficit-at-13-per-cent-says-finance-minister-arun-jaitley/story/283063.html