Chief Minister H D Kumaraswamy on Saturday asked the Centre to extend GST compensation beyond five years, saying that the state will face “severe financial crunch” after the recompense period ends in 2022.
Speaking at the first meeting of the Governing Council of Niti Aayog chaired by Prime Minister Narendra Modi, the chief minister said that while the revenue gap was being bridged by the assured compensation till 2022, the state had limited scope to mobilise additional revenue thereafter.
It is evident that at the end of 2022-23, there would be a steep fall in revenues of the state as compared to the protected revenue of 2021-22 which would have accrued to the state due to the constitutionally guaranteed compensation, he said.
“Thus, in case this revenue gap is not bridged in the coming years despite all compliance efforts, adequate compensation, in the manner as envisaged in the Compensation Act, should be extended beyond 2022,” he added.
While implementing the Goods and Services Tax (GST), the Centre had assured the states to compensate them for loss of their revenue for five years till 2022.
While urging the Centre to increase the allocation to the rural drinking water sector, Kumaraswamy also requested the prime minister to approve Rs 2,064 crore relief from the National Disaster Relief Fund (NDRF) for damage to crops in the 2018-19 rabi season.
The chief minister requested the Centre that all future railway projects in Karnataka should be implemented by Railways on its own resources as the state was finding difficult to fund them under the current 50% cost-sharing arrangement.
He also requested to expedite Bengaluru suburban rail project. On the ranking system adopted by NITI Aayog, Kumaraswamy said it should be more participative, scientific and transparent.
“For example, giving 58th rank to Bengaluru in Ease of Living Index is unacceptable as Bengaluru is widely rated as the most preferred city for work in the country by reputed agencies,” he said.