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Telangana got least GST compensation than other southern states
HYDERABAD: Under the Centre’s special borrowing scheme, Telangana received the lowest Goods and Services Tax (GST) compensation, Rs 2,197 crore, than other southern states.
Facing fund crunch to provide GST compensation to states during Covid-19, the Centre had pooled funds from its own resources to compensate the states. The Centre had borrowed over Rs 1 lakh crore to help states reeling under revenue loss due to the economic slowdown and the pandemic and fill shortfall in payment of GST compensation.
Exclusive data with TOI on fund release to states (as of March 21) under the special borrowing scheme reveals that Telangana had received less compensation among the country’s large states. Meghalaya (Rs 112 crore), Goa (Rs 838 crore) and Assam (Rs 992 crore) were the three states with less GST compensation than Telangana under this scheme.
Among the southern states, Kerala had received Rs 4,923 crore, while Tamil Nadu got Rs 6,229 crore as GST compensation from the Centre under its special borrowing plan. Karnataka had benefited the most with the highest GST compensation (Rs 12,383 crore) in this scheme.
Speaking to TOI, Dr Krishna Reddy Chettidi, assistant professor, School of Economics, University of Hyderabad, said “The need for GST compensation in Telangana as a whole must be lower than in many other states given the state’s strong GST collection efforts. Also, the GST compensation deficiency must be lower.”
Under GST law, states were guaranteed to be compensated for any loss of revenue in the first five years of the GST implementation from July 2017.
