Cheema to attend conclave of Opposition-ruled states’ finance ministers
Finance ministers of Kerala, Telangana, Tamil Nadu, Karnataka and Punjab will attend the conclave to seek a fair share in fund allocation from the 16th Finance Commission.
Punjab finance minister Harpal Singh Cheema will participate in a conclave of the finance ministers of five Opposition-ruled states scheduled to be held in Kerala on Thursday to seek a fair share in fund allocation from the 16th Finance Commission.
Cheema said the finance ministers of southern states of Kerala, Telangana, Tamil Nadu and Karnataka would also attend the conclave. “The issues being faced by the Opposition-ruled states will be discussed in this meeting in which economists and financial experts, like Dr Arvind Subramanian, will also share their views,” he said before leaving for Thiruvananthapuram. Subramanian is a former chief economic adviser to the Central government.
Some Opposition-ruled states have accused the BJP-led National Democratic Alliance (NDA) government at the Centre of targeting them by imposing “unfair” cuts in their financial allocations to have their way, and the conclave is being widely seen as an attempt to mount pressure on the Central government for a better deal. The Bhagwant Mann-led Aam Aadmi Party (AAP) government in Punjab has repeatedly accused the Centre of withholding the state’s share totalling approximately ₹8,000 crore on account of Rural Development Fund (RDF), Mandi Development Fund, National Health Mission and Special Assistance to State for Capital Investment.
Meanwhile, the state government also said that Cheema apprised the GST Council regarding the decrease in the state’s effective taxation rate since GST implementation, suggesting that the council must look at ways to compensate states that are losing revenue due to the implementation of the indirect tax regime.
In a press release summarising the 54th GST Council meeting, an official spokesperson of excise department said the finance minister informed the council that as tax rates under GST regime are no longer under state control, Punjab cannot offset losses resulting from change in tax system. “Furthermore, since Punjab’s industries manufacture goods consumed in other states, the state receives lower IGST settlements,” he said.
Cheema urged the council to explore ways to compensate states losing revenue due to GST implementation. The GST Council reportedly acknowledged his suggestion and assured prompt action.
“The FM also argued in favour of exempting research grants from GST, citing the importance of promoting education as a top priority for the Punjab government. The GST Council agreed to exempt research grants, including private grants to government institutions, research associations, universities, colleges, and other institutions notified under Section 35 of the Income Tax Act,” the release mentioned.