States GST revenue deficit at 34% in first 5 months of FY22

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GDP Data Overestimates:

NEW DELHI: Even as the Centre has decided against extending the compensation given to states for revenue loss due to implementation of GST after June 2022, the revenue deficit of the states do not present a very rosy picture.Barring three north-eastern states and Sikkim, all other states/UTs have reported revenue deficit ranging from 23% to 65% during April-August 2021. On an aggregate basis the average gap between the protected revenue and actual collection is 34%.

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This deficit is arrived at after subtracting actual state GST revenue from the protected revenue promised by the Centre. As per the formula of the protected revenue, states GST revenue is assumed to grow at 14% every year starting from 2015-16.

According to data provided in the agenda of the recently concluded 45th GST Council meeting, Puducherry has reported biggest revenue deficit with the gap between protected revenue and actual collection at 64.3% during April-August 2021. Puducherry is followed by Punjab and Goa (52% deficit), Uttarakhand (49%), Delhi (47.3%), Chhattisgarh (46.7%), Himachal Pradesh (46%) and Kerala (45.6%).

Other states which have reported over 40% deficit are Jammu and Kashmir (41%) and Karnataka (40.8%).
Among those which have showed lowest deficit during the April-August period are Telangana (23.4%) and Andhra Pradesh (25.5%).

TS Singhdeo, commercial tax minister of Chhattisgarh, said the 5-year period for compensating states was decided on the basis that high economic growth would ensure states make good of the losses. “However, even before the pandemic hit, the economy was already decelerating making it difficult for states to increase their GST revenue,” he said.

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