The state governments are struggling financially due to the COVID-19 pandemic. Now, they have again knocked at the Centre's door seeking clearance of their pending dues. According to senior government officials and sources, states have demanded early disbursement of pending goods and services tax (GST) compensation dues and several grants and aids to deal with the pandemic.

Share Market Live

NSE

Revenue shortfall is the biggest challenge that the States and Union Territories across India are facing today, "States are juggling with various expenses to pay off their routine salaries and to meet their day to day expenses," government officials added.

Troubled by a double whammy of poor GST revenue and rising expenditures, many states are keenly waiting for the North Block to clear their pending dues, sources added.

"Revenue decline which is ranging between 60 percent to 85 percent across India for the months of April & May, is making it tough for states to survive," government officials said.

When contacted by CNBC-TV18, many state finance ministers and revenue officials shared that the "revenue decline mostly because of a dip in the GST collections, for Madhya Pradesh and Uttar Pradesh is 60 percent, Maharashtra has recorded a dip of 61 percent, Haryana has seen a decline of 63 percent.

Highest amongst the states whom, CNBC TV18 approached is of Delhi, a decline of 85 percent for the months of April and May, Assam saw a decline of 65 percent, Kerala at 73 percent dip and Gujarat also saw a decline of 65 percent in the revenue collections."

Assam Finance Minister, Himanta Biswa Sarma said that the state is finding it tough as collections as very low, but with reopening of economic activities and having received grants from the Centre through the disaster relief management fund, "Assam has yet again managed to pay all its salaries on the 1st of June."

He also said that "Assam expects revenue collections to pick up in months to come."

West Bengal's finance minister, Amit Mitra said that "We will again raise the issue of pending GST compensation dues in the next GST council meeting. Centre owes Rs 52,000 crore to West Bengal, including GST compensation and other dues. We have written various letters to the Centre in this regard. Chief Minister Mamata Banerjee too has conveyed it to Prime Minister Narendra Modi, but the state is still waiting to hear back from Centre."

Similarly, Delhi's Deputy Chief Minister and Finance Minister Manish Sisodia also said that he has written to the Union Finance Minister Nirmala Sitharaman highlighting that the lockdown has heavily eroded the revenue collections of the state.

“I have written a letter to the Hon’ble Union Finance Minister on 26th May in this regard seeking an immediate aid of Rs 5,000 crore to help us pay off salaries of the Delhi Government employees. Other states have received financial assistance from the Disaster Relief Fund, but the Delhi government has not received any such aid yet. Even during usual times, Delhi does not receive any sort of aid from the Centre. But now as Delhi government's revenue is severely affected due to the COVID-19 induced lockdown, it is about time we received some financial relief from the Centre to be able to pay salaries of our employees- teachers, doctors, engineers, civil defence personnel, and people involved in coronavirus relief work,” he added.

"We have reviewed Delhi Government’s minimum expenses. According to that, we would need around Rs 3,500 crore every month to pay salaries to our employees and to meet other office expenses. The GST collections in the past two months have only been Rs 500 crore, and after combining it with other sources, we have managed to collect Rs 1,735 crore. But we actually need at least Rs 7,000 crore,” Sisodia said.

When CNBC-TV18 reached out to state revenue officers and senior commissioners who monitor the field situation, be it the revenue collections, economic activities and noting trends of the current market situation, they said that "states might state seeing a revival in their collections only after September-October, 2020."

In Gujarat, Haryana and Madhya Pradesh, these officers have started suggesting alternate industries to get into alternate businesses amid demand slump.

"A lot of Gujarat factories which had industrial alcohol for chemicals manufacturing, we have encouraged them to start manufacturing sanitizers and switch their business model to remain afloat," said a senior revenue officer in Gujarat.

Similarly, in Haryana, " Government is encouraging cloth manufacturing units to switch to manufacturing of masks and PPE kits," officer working in Haryana added. However, they feel that industrial activities, like can remain afloat only for a limited time as many companies are yet to restart since they do not see any demand.

First Published:Jun 2, 2020 5:57 PM IST