GST remains challenge in Gujarat

By Accommodation Times Bureau


Gujarat’s rapid progress in key macroeconomic parameters has been impressive and it has shown a lead to the overall economic development but GST remains one of the big challenges, said the Chairman N. K. Singh, Chairman of the visiting Fifteenth Finance Commission at a Press Conference in Ahmedabad.

Commission was particularly impressed with the reduction of its Debt to GDP Ratio close to 20% (to be achieved by 2023-24) as stipulated by new FRBM Act and its Fiscal Deficit well below 3 % benchmark. He added that Gujarat’s capital expenditure has been rising and it is in full compliance with key economic parameters which contribute to long-term healthy economic growth.

Recently, Gujarat is improving its expenditure on health and education – areas which deserve fuller attention over the coming years. Sh. Singh mentioned that Gujarat has shown the lead in achieving more balanced development among primary, secondary and tertiary sectors. Chairman in his remarks outlined few challenges which the state is facing –

1. One of the big challenges Gujarat is facing is GST collections. Once the 14% guarantee as GST compensation by the union govt winds up, Gujarat will need to look at the GST collection projections seriously and tax buoyancy may become an issue.

2. How to restructure National Disaster Relief Fund considering Gujarat is prone to various kinds of natural disasters. The state has made some suggestions in this regard.

3. Though almost all the powers have been delegated to ULBs and their accounts are in order, working of State Finance Commission needs to become more orderly and in conformity with Article 280 of the Constitution. It’s a general problem with all the states, Commission has visited till now. It needs overall improvement.

He said that commission has taken a note of the detailed presentation made by the state govt. Commission appreciated the new initiatives taken by the state of Gujarat. Continuous of this growth momentum is dependent on some exogenous uncertainties like GST while maintaining key macroeconomic parameters which are a good example for many states to follow.

State govt officials in their presentation urged the enhanced devolution by expanding the net divisible pool to remove the imbalance between revenue and expenditure responsibilities of the states, in general. They also urged the Commission to replace the revenue deficit grants with Performance grant which needs fine tuning of the performance criteria. They also highlighted the issues related to Centrally Sponsored Schemes.

The Chief Minister submitted a detailed Memorandum to the Commission. Chairman complemented the Govt. of Gujarat for making an illuminating presentation to the commission regarding the opportunities and challenges in all the sectors of the economy of the state. He also stated that the issues raised would receive appropriate consideration during deliberation in the Commission.


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