AERIAL VIEW
The central government told the states in the Goods and Services Tax (GST) Council that the buoyant GST revenue trend shows that states no longer need funds from the Centre as compensation for the 2017 indirect tax reform.
State governments continue to demand GST compensation beyond June 2022. However, they are aware that proceeds of GST cess collection will have to be used to service the debt raised in the last two financial years to meet the compensation shortfall and do not see the possibility of the Centre extending compensation payments beyond June.
Now for small states like Goa which has thousands of crores of debt and very little revenue, this could be the end of the road.
We all know how much the State is borrowing every week to pay salaries, even as the Chief Minister, Dr Pramod Sawant, boasts of the development of roads and bridges.
Editor, Goemkarponn
The worst nightmare of Goa has come true. The Centre has finally announced that it will stop GST compensation.
The central government told the states in the Goods and Services Tax (GST) Council that the buoyant GST revenue trend shows that states no longer need funds from the Centre as compensation for the 2017 indirect tax reform.
State governments continue to demand GST compensation beyond June 2022. However, they are aware that proceeds of GST cess collection will have to be used to service the debt raised in the last two financial years to meet the compensation shortfall and do not see the possibility of the Centre extending compensation payments beyond June.
Now for small states like Goa which has thousands of crores of debt and very little revenue, this could be the end of the road.
We all know how much the State is borrowing every week to pay salaries, even as the Chief Minister, Dr Pramod Sawant, boasts of the development of roads and bridges.
It is said that Chief Minister Dr Pramod Sawant, during his visit to Delhi along with Mauvin Godinho, met Finance Minister Nirmala Sitharan and asked her not to stop GST compensation.
However, sources say they were cold-shouldered by the Union Minister.
She reportedly told CM that they had hiked tax on casinos and racecourses, as well as online gaming, so that the State could get additional revenue.
But is the revenue from Casinos enough to survive? Goa’s finances today are in a precarious condition, and with debts reaching nearly Rs 26000 cr, yet the govt says it is within “permissible limits”.
The debts have been amassed for unnecessary projects like the “Atal Setu”, which has become a failed project due to frequent potholes and accidents.
So what does stopping GST compensation mean for Goa? It simply means a revenue shortfall of Rs 200 to Ra 300 cr per month. So now the State will borrow Rs 200 to Ra 300 cr additional every month.
Another question that arises is during the COVID19 pandemic; the Centre had given additional like to borrow as it could not pay compensation, and there was no revenue generated.
So the State government took additional loans. Now the question is, who will do the debt servicing of these loans? Why should the state pay Mrs Sitharaman?
Agreed, Goa has seen a lot of development in the last ten years, but at the same time, the burden on the exchequer has also increased manifolds. Moreover, the development seems cosmetic, and the major issues like health and education infrastructure, human development, and employment have taken a backseat.
