State finance ministers, worried over falling revenues, urged Union finance minister Arun Jaitley during the Goods and Services Tax (GST) Council meeting on Saturday to hold discussions on demonetisation.
“The state finance ministers (FMs) wanted a discussion on the fiscal situation of states after demonetisation. But it does not come under the purview of GST council, because it covers only indirect tax,” Jaitley told media persons after the fifth Council meet in New Delhi.
“After the GST council meet, the FMs discussed the situation of demonetisation. Political stand of parties was reflected more in the discussions,” he added.
West Bengal finance minister Amit Mitra told media persons that the issue was raised by all states at the Council meet as their revenues have been hit hard.
‘All the states raised voice on discussion on demonetisation. It has to do something on states’ revenues. All states asked for a discussion and the finance minister did grant the discussion.
“Tax collections of states and centre will be low (because of demonetization). States are deeply concerned about their falling revenues. How do we implement the health and education programmes of the states?” he added.
Hinting at a continued logjam in the GST Council due to the political stand-off on demonetisation, Mitra said: “I cannot predict if the GST issue will be resolved in the Council. I am not a ‘star reader’. Earlier the compensation was based on GST, but now the revuenes are falling because of two factors - GST and demonetisation. So compensation will be huge.”
Mitra further said that the GDP in the third quarter is likely to be negative while GDP in the fourth quarter may be very low as a result of demonetisation.