Lok Sabha Question No. 4319 (UNSTARRED), answered on 2021-03-22
Subject: Release of Pending Funds to Punjab
Ministry: FINANCE
Asked by: Preneet Kaur

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK SABHA

## UN-STARRED QUESTION NO- 4319 ANSWERED ON-22/03/2021

## RELEASE OF PENDING FUNDS TO PUNJAB

## 4319. SHRIMATI PRENEET KAUR:

Will the Minister of FINANCE be pleased to state:

- (a) the  estimated  time  period  within  which  the  Government  proposes  to  release  the  pending amount  of  Rs.  8,253  crore  GST  compensation  to  Punjab  for  the  period  of  April,  2020  to January, 2021;
- (b) whether the Government proposes to make available the GST compensation on monthly basis and if so, the details thereof and if not, the reasons therefor;
- (c) whether the 15th Finance Commission in its final report for the period 2021-22 to 2025-26 has recommended  certain  sector-specific  and  state-specific  grants  for  Punjab  amounting  to  Rs. 3,442 crore and Rs. 1,545 crore respectively; and
- (d) if so, the estimated time period within which the funds will be made available to Punjab?

## ANSWER

## MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) to (b): As per provisions in Section 7 of the GST (Compensation to States) Act, 2017 loss of revenue to the States shall be calculated and released at the end of every two months' period, for 5 years.  However, in the wake  of COVID-19  pandemic  the  GST  collection  as  well  GST compensation  cess  collection  declined  sharply  in  FY  2020-21,  due  to  which  GST  compensation requirement to  all  States/UTs  increased.  Such  increase  in  the  GST  compensation  requirement  of States/ UTs during FY 2020-21 could not be met from the GST Compensation Fund, as the amount available in the GST Compensation Fund was not adequate. Accordingly, the GST compensation of ₹ 12,402 crore for part period April-May, 2020 and for full period June'20-January'21 is pending to the State of Punjab along with all other States/ UTs. In addition, in order to meet the shortfall in GST compensation to be paid to States,  ₹ 1.1 lakh crore has  been  borrowed by Government of India in appropriate tranches using a special window. The amount so borrowed has been passed on to the States as loan on back-to-back basis to help the States to meet the resource gap due to nonrelease of compensation due to inadequate balance in the Compensation Fund. As per this decision, Central Government has released ₹8,359 crore to the State of Punjab. All States have decided to take benefit of this assistance to tide over the temporary resource gap.  In addition, depending on the  amount available  in  the  Compensation Fund, Centre has also been releasing the regular GST compensation  to  States  to  make  up  for  GST  revenue  shortfall.  The  States  will  be  paid  full  GST Compensation  as  per  GST  (Compensation  to  States)  Act,  2017  for  the  transition  period  by extending the levy of Compensation cess beyond 5 years to meet the GST revenue shortfall as well as servicing the loan borrowed through special window scheme.

(c) to (d): Yes, Sir.  15th Finance Commission has recommended    ₹ 3,442 crore to Punjab for six specific- sectors. The details are as under: -

| S/No.   | Components         |   Amount recommended (₹ in crore) |
|---------|--------------------|-----------------------------------|
| 1.      | Health Sector      |                               902 |
| 2.      | PMGSY              |                               230 |
| 3.      | Statistics         |                                43 |
| 4.      | Judiciary          |                               145 |
| 5.      | Higher Education   |                               156 |
| 6.      | Agriculture Sector |                              1966 |
|         | Total              |                              3442 |

According  to  Explanatory  Memorandum  placed  in  the  Parliament  during  Budget  2021-22,  the Government will give due consideration to Sectors identified by the Commission while formulating and implementing existing and new Centrally Sponsored and Central Sector Schemes.

Besides,  the  15th  Finance  Commission  has  also  recommended  Rs.1545  crore  as  State  Specific grants to Punjab during award period 2021-2026.  The details are as under:-

| S/No.   | items                                                                                                                 |   Amount recommended (₹ in crore) |
|---------|-----------------------------------------------------------------------------------------------------------------------|-----------------------------------|
| 1.      | Remediation of Pollution of Sutlej river through Budha Nala                                                           |                               400 |
| 2.      | Four new institutions of medical education and research at Mohali, Hoshiarpur, Shaheed Bhagat Singh Nagar and Fazilka |                               700 |
| 3.      | Pilot project for installation of 15000 KW of rooftop solar power plants, Bhatinda                                    |                                40 |
| 4.      | Development of Bhatinda Fort                                                                                          |                                10 |
| 5.      | Reduction in pollution caused by stubble burning by diversification of paddy to other crops                           |                               350 |
| 6.      | Development of Partition Museum, Amritsar                                                                             |                                10 |
| 7.      | Development of Patiala Fort                                                                                           |                                13 |
| 8.      | Jang-e-Azadi Memorial, Kartarpur, Jalandhar District                                                                  |                                12 |
| 9.      | Pushpa Gujral Science City, Kapurthala District                                                                       |                                10 |
|         | Total                                                                                                                 |                              1545 |

As already mentioned in Explanatory Memorandum placed in the Parliament during Budget 202122, due consideration will be given to the aforesaid recommendations of 15th Finance Commission in respect to Punjab, keeping in view of the untied resources with the State Governments and the fiscal commitments of the Central Government.

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