No sign of GST money for first 2 months of fiscal to state

Four months into 2020-21 fiscal, Karnataka is yet to receive the first instalment of GST compensation for the year, which is estimated at around Rs 4,800 crore.

There is also a cloud of doubt on whether the state will receive its full share of the Rs 28,591 crore of the funds devolved for the financial year by the Centre, following reports that it will struggle to shore up the necessary resources to pay states as per the existing revenue-sharing formula.

These constraints are expected to compromise the financial condition of the state, as it fights an uphill battle against the pandemic during a period of economic contraction.

When contacted, Additional Chief Secretary (Finance) I S N Prasad told DH that the first instalment of GST compensation for the first two months of the fiscal was due. "(GST compensation) for April and May was due in June, but not received so far," he said.

Meanwhile, according to reports, even the Rs 28,591 crore allocated to Karnataka under devolution in the union budget for the current fiscal - which is around Rs 11,200 crore less than the budgetary allocation of Rs 39,806 crore in 2019-20 - may not be realised at the end of the fiscal. As the Centre planned to rework the GST-sharing formula due to the dip in revenue collection, sources said that Karnataka's share would reduce further by at least 10%.

Plans to take loans

After the Centre relaxed lending limit for states, Chief Minister B S Yediyurappa has vowed to borrow loans to take up development works.

Referring to the National Highway works undertaken in Karnataka at an event held recently to mark one-year of BJP administration, Yediyurappa said the state has completed 970 km of national highway and was receiving only Rs 500 crore for highway works, even though they had requested the central government for more.

"We will ensure that these highways are completed even if it meant taking additional loans," the CM said.