Home / News / India /  Kerala FY23 budget assumes GST compensation for full year: KN Balagopal

CHANDIGARH : Kerala’s FY23 state budget takes into account Goods and Services Tax (GST) compensation from central government for full year and not just upto June, state finance minister K.N. Balagopal said, expressing optimism that demands from state governments for compensation beyond June will get GST Council’s endorsement.

Balagopal’s optimism about the Centre agreeing to extend fiscal support for GST-implementation related revenue shortfall of states matches with similar expectations from some of the other state finance ministers. Delhi and Chhattisgarh have also demanded extension of GST compensation beyond June, when the current scheme expires. GST compensation was envisaged originally only for the first five years of GST, which gets completed by the end of this month.

“Our budget is for the full year. We have prepared the budget with the assumption that GST compensation will continue… We are expecting that compensation will continue as it is a matter of natural justice. We are seeking an extension of five years," Balagopal said in an interview.

GST council is expected to look into these demands on Wednesday.

Balagopal said that the state has not shied away from spending on social and infrastructure sectors in spite of the financial setback suffered due to the covid pandemic and the floods the state faced in the recent past.

The minister explained that Kerala was not facing any debt trap and that its fiscal problems are similar to that of any other state. “Kerala is not facing any debt trap. Every state is having some financial problem because of covid pandemic. In the case of Kerala, we also faced a flood in the recent past. Our problems are not any different from that of other states. Besides, economy is facing a stress the world over. That also contributes to states’ problems," the minister said. He was responding to an article by RBI economists naming Kerala among five highly stressed states with high indebtedness requiring urgent corrective measures.

The minister said that the state has not shied away from its responsibilities and that it has distributed free kits comprising food and other materials to people during the covid period to offer relief as incomes were affected due to the lockdown.

“We are not holding back on any of these necessary expenditure…We are investing in education in a big way. We are trying to give an impetus to the economy by focusing on knowledge-based sectors. We are developing educational institutions and infrastructure," the minister said explaining how the South Indian state is supporting economic recovery.

ABOUT THE AUTHOR

Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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