Lakshmana Venkat Kuchi
Karnataka on Friday reiterated that it was being discriminated in the devolution of funds from the centre and hoped its apprehensions over GST rationalisation do not affect fiscal interests of the states.
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Karnataka Chief Minister Siddaramaiah said, “We are for rationalisation of GST rates, ease compliance and reducing the burden on people." "But such reforms must be accompanied by a robust framework that protects the fiscal interests of the states,” he said in a statement.
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“Today, representatives from eight opposition-ruled states met in Delhi to deliberate upon the Union Government’s announcement regarding rationalisation of GST rates. Karnataka was represented at the meeting by our Revenue Minister, Krishna Byregowda,” the Chief Minister said.
These issues cropped up during the meeting where other representatives too expressed similar sentiments.
States will find it difficult to sustain welfare and development programmes, and a serious weakening of their financial autonomy, the Karnataka Chief Minister said.
Opposition leaders had consistently objected to the faulty implementation of GST in 2017 and have always demanded rationalisation of rates. Even within the GST Council, states have repeatedly pressed for rationalisation, always with the caveat that the revenue interests of states must be safeguarded. Karnataka too has raised this issue in multiple Council meetings, he recalled.
“GST is a joint responsibility. It is founded on equal responsibility and respect for states and centre. For the sake of endurance and stability of GST, Centre and states must work together. This requires states to be taken into confidence and their concerns addressed adequately. We expect the central government to respond constructively and positively, engage with states in good faith in the true spirit of cooperative federalism,” Siddaramaiah said.
Karnataka has already been subjected to discrimination in the devolution of funds from the Union Government, suffering an annual shortfall of nearly Rs 25,000 crore, the state Chief Minister said and added, “Any further erosion of GST revenues will only compound this injustice and directly affect our capacity to deliver on the promises of development and welfare.
“Therefore, I strongly urge that the rationalisation of GST rates must be supported by: A robust revenue protection framework for states, A supplementary levy on sin and luxury goods, and A guaranteed compensation mechanism for at least five years,” he said adding, I welcome the consensus draft prepared by opposition-ruled states at today’s meeting, which will be placed before the GST Council. This draft seeks to ensure reforms that are both fair and sustainable.”