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“Extend GST compensation and additional borrowing limit for states,” Ashok Gehlot’s letter to PM Modi


Jaipur: In a letter written to Prime Minister Narendra Modi, Rajashthan Chief Minister Ashok Gehlot has said that the GST compensation to the states should be given for 5 more years and it should be provided for the total revenue deficit of the state.

Gehlot has further requested in the letter that in view of the economic situation arising as a result of Covid-19 pandemic, the states should be allowed for additional borrowing during the next financial year as well.

Prior to the Union budget of 2021-22 which is to be presented in the parliament, in his letter, Gehlot attracted the Prime Minister’s attention on critical issues related to the economy and said that the Covid-19 pandemic has caused major negative impact on the state’s economy.

Though the economic activities have resumed after end of nationwide lockdown and lifting of many other restrictions, “they are far from reaching the normal levels.” he added in the letter.

The Chief Minister has asked the Prime Minister that looking at the prevailing situation, the period of the central government providing GST compensation to the states upto June 2022 be extended by 5 more years and this compensation should be given upto June 2027.

Gehlot once again reiterated an earlier demand of providing GST compensation to the states for the total revenue deficit rather than bifurcating it on certain grounds.

The letter highlighted the fact that in view of the situation arising out of Covid-19, Rajasthan availed additional borrowing to the tune of 2% of GSDP in the current financial year. To enable the state government to take care of the resource envelope required for committed liabilities, Gehlot requested that the similar provision of 2% additional borrowing should be made available in the next financial year as well.

Gehlot stated that the negative impact of Covid-19 pandemic on economy would cause continued stunted growth. As a result, not only the expected growth in GSDP would not be achieved, also the revenue streams of the state would not reach desired levels.

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