THIRUVANANTHAPURAM: In a major relief to Kerala amid a financial crisis, the Union government on Tuesday cleared a GST compensation of Rs 5,693 crore due to the state till date. The Centre has released a total of Rs 86,912 crore, the entire GST compensation amount, due to different states till May 31. Two weeks ago, state Finance Minister K N Balagopal wrote to the Union finance minister seeking immediate release of GST arrears due to the state. “The decision was taken to assist states in managing resources and ensuring that their programmes, especially the capital expenditure, are carried out successfully during the financial year,” said an official statement in New Delhi.
The Centre released the amount despite the fact that only around Rs 25,000 crore was available in the GST compensation fund. The balance amount was released by the Union government from its own resources. At a time when Kerala reels under a financial crisis, the GST compensation has undoubtedly come as a major relief. With more than 11,000 employees retiring from service on Tuesday, the state will have to spend around Rs 3,400 crore to pay their retirement benefits.
Welcoming the Centre’s move, Balagopal, however, made it clear that the state will continue with its demand for extension of compensation for five years. It’s an amount the state had already earmarked in its budget estimates. “This is a major relief for the state, especially in the backdrop of the recent decision on borrowing. However, the problem would persist, as the compensation is only till June. The state will continue with its demand for extension of compensation,” Balagopal told TNIE.
With the Centre not issuing clearance for additional borrowing in the first quarter of this fiscal, the state was facing a major crisis. The Union government had earlier set the maximum borrowing limit for Kerala at Rs 32,425 crore for this fiscal. In addition, the Centre has been insisting that off-budget borrowing by the state PSUs should be treated as borrowing by the state government. Two weeks ago, the Centre accorded permission to the state to borrow Rs 5,000 crore from the market on an ad hoc basis. Of this, the state is planning to borrow Rs 1,050 crore in the first phase, said sources.