Lok Sabha Question No. 1770 (UNSTARRED), answered on 2020-03-02
Subject: GST Compensation to Kerala
Ministry: FINANCE
Asked by: N.K. Premachandran

## GOVERNMENT OF INDA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

LOK SABHA UNSTARRED QUESTION NO. 1770 TO BE ANSWERED ON MONDAY, THE  2 nd  MARCH,  2020 Phalguna 12, 1941 (Saka)

## GST Compensation to Kerala

## 1770. SHRI N.K. PREMACHANDRAN:

Will the Minister of FINANCE be pleased to state:

- (a)whether  the  Union  Government  has  disbursed  GST  compensation  to  the  States  till  this  date  without arrears and if so, the details thereof;
- (b) the total amount of arrears under the head GST Compensation to the State of Kerala which is pending with the Union Government;
- (c) whether the Union Government has cut the borrowing ceiling for Government of Kerala from 3 per cent of GST Bill and if so, the details thereof;
- (d)  whether  it  has  come  to  the  notice  of  the  Government  that  the  deduction  in  GST  compensation  and cutting of borrowing ceiling has adversely affected the fiscal and cash position of Kerala;
- (e) if so, the action taken for extending assistance for Kerala to overcome the crisis; and
- (f)  whether  the  Union  Government  has  received  representation  from  the  State  Government  of  Kerala requesting for transfer of GST compensation amount and if so, the action taken thereon?

## ANSWER MINISTER OF STATE IN MINISTRY OF FINANCE (Shri Anurag Singh Thakur )

(a) & (b) :- As per provision in the GST (Compensation to States) Act, 2017, compensation is being released to the States on bi-monthly basis for loss of revenue on account of implementation of GST. Accordingly, GST Compensation of Rs.48785 crore and Rs.81141 crore has been released to the States/UTs for the financial year  2017-18  (July,  17  to  March,  18)  and  2018-19  (April,  18  to  March,  19)  respectively.  In  the  current financial year 2019-20, GST Compensation has been released fully to Kerala along with other States for AprilSeptember,  2019  and  partly  for  October-November,  2019.  The  details  of  GST  Compensation  released  to Kerala in the current financial year are given below: -

| Period for which compensation has been released   | Amount (Rs. in Crore)   |
|---------------------------------------------------|-------------------------|
| April-May, 2019                                   | 862                     |
| June-July, 2019                                   | 1284                    |
| Aug-Sept, 2019                                    | 1597                    |
| Oct-Nov, 2019                                     | 854*                    |
| Total                                             | 4597                    |

(c) (d) & (e) :- Net Borrowing Ceilings (NBC) of the State of Kerala for the year 2019-20 have been fixed at Rs. 24,915 crore anchoring the Fiscal Deficit target of 3 per cent of GSDP based on the calculation prescribed under the recommendations of Fourteenth Finance Commission (FFC) for the period of 2015-16 to 2019-20. Hence, the Union Government has not cut the borrowing ceiling for Government of Kerala from 3 percent of GSDP.

However, the Union Government also approved in April 2016 that any additional borrowings availed beyond  the  State's  entitlements  shall  be  adjusted  from  Net  Borrowing  Ceiling  of  the  following  year. Accordingly,  as  per  the  information  submitted  by  the  State  of  Kerala  for  2018-19  (RE),  there  is  an  overutilisation of borrowing of Rs.12,008 crore beyon d the State's entitlements during the year 2018 -19, which has been adjusted from the NBC of 2019-20.

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