Govt set to release Rs 20,000 cr pending GST compensation to states soon

The finance ministry is set to release Rs 20,000 crore in pending goods and service tax (GST) compensation to states soon, Business Standard has learnt. This will not be from the compensation cess, but from the Consolidated Fund of India, and comes days after the Centre disbursed Rs 17,287 crore to states as devolution and disaster funds. The finance ministry and the Prime Minister’s Office are also working on another stimulus package, which is expected to be announced soon. There is no definitive number yet on the quantum of the package, which will again be aimed at the urban and rural poor, micro, small and medium enterprises and the sectors most affected by the coronavirus disease (Covid-19) pandemic and the subsequent 21-day nationwide lockdown.

Officials working on the stimulus package say that a lot of ever-changing factors are still under consideration. These include active cases of Covid-19, hotspots, and the status of the lockdown after April 14. “The revenue department has been authorised to clear Rs 20,000 crore in GST compensation dues to states,” said a top government official. “We can only disburse compensation to states from the compensation cess fund. Since it is not available, approval has been given for releasing it from the Consolidated Fund,” said a second official. Even with the Rs 20,000 crore distributed among states, it will still be a fraction of what they have been demanding in financial support and clearance of pending dues.