Karnataka chief minister demands extension of GST compensation to states beyond 2022

New Delhi: The Covid crisis since the last financial year has brought the state revenues down, including GST collections. Considering the situation, Karnataka chief Minister Basavaraj S Bommai on Thursday demanded the centre to extend the GST compensation period to states beyond 2022 for three more years.

After a meeting with Union Finance Minister Nirmala Sitharaman, Bommai said that he discussed GST dues to the tune of ₹ 11,000 crores to be paid to Karnataka in instalments. Considering the revenue crisis in all the states, the centre had provided the GST compensation loan for 2021-21 fiscal. It has also been extended for the current fiscal.

In the meeting, Bommai, who is also a member of the GST council, flagged that the 15th Finance commission in its final report for 2021-26 recommended a reduction in Karnataka's share in tax devolution to 3.647 per cent, as compared to 4.71 per cent recommended by 14th Finance commission. Since Karnataka has seen the steepest cut of 23 per cent because of the reduction of devolutionary share, he requested the finance minister to reconsider the criteria of horizontal devolution for sharing of resources between states. He also informed that the state government had submitted an additional memorandum to the commission in this regard. But the commission has not considered the state's request. He said that this has clearly affected Karnataka in comparison to other states.

Bommai said that the state has further potential to achieve more investments if the critical infrastructure is improved. He added that he had a detailed discussion with the finance minister about the NABARD assistance given to different groups, including SC and ST women, Self Help Groups(SHG), and infrastructure purposes.