Deputy CM attacks Centre for not paying GST dues, says Delhi’s financial situation is very bad but schemes for free power and water will continue
At a time when new COVID-19 cases in the city are increasing, Delhi Deputy Chief Minister and Finance Minister Manish Sisodia told The Hindu that more people will die of depression than the virus if the economy is not opened up. He also talked about the financial implications of the pandemic, Centre’s GST dues to States, and continuation of welfare schemes.
The Delhi government is opening more sectors despite an increase in COVID-19 cases in the city. Don’t you think this is dangerous for the people?
We have to learn to live carefully, rather than closing everything. If we close everything, then more people will die sitting at home than people who will die from corona. More people will die because of depression. We have to see the practical aspects and not theoretical. Theoretical is that there is a pandemic, so sit at home. Practical is that, if people sit at home for two-three months, people will not have anything to eat, then the number of deaths due to it will be more than due to novel coronavirus.
Will the govt. continue welfare schemes such as free electricity and water, and free bus rides for women?
We have been continuing it and these schemes will continue.
Will the government go forward with its plan for free metro rides for women?
Now the metro is closed. Let us see after it opens.
Excise is a good revenue source for the Delhi government. When will you allow bars to reopen?
Currently, there is no restriction by the Centre for bar counters. For Delhi, we will have to decide how much we need to open up.
What is the financial situation of Delhi?
The situation is very bad in Delhi. Tax revenue collection is down by 57% compared to estimated collection. How can you pay the salaries with this income? We have to pay salaries to teachers, doctors, and other staff. We have never seen a situation like this. At this point, forget about future plans, we do not have enough money to spend for most essential expenses. But no major government scheme has been affected till now.
What is the impact of GST on the current financial situation?
Since GST, there has been no growth in the economy. GST implementation has not happened properly, it is bad. ITC matching has not been sorted, HSN code is very far in the future. All these things were promised, but all these measures have not been done. The problem with VAT was that for something being produced in Rajasthan and being sold in Nagaland, the ITC returns would take years, there was no ITC matching. Rajasthan would be working in one software, Nagaland in another. GST was brought to fix these problems, but the whole GST system has been running for the past three years in ad hoc measures. The Centre has failed in implementing the GST system.
What is happening with GST compensation to States?
They [Central government] are saying that the State governments should take loan. The Centre not compensating the States is illegal, unconstitutional and impractical. In the 10th GST Council meeting, the Secretary of the Finance Ministry said that the Centre could raise resources by other means for compensation and this could be then recouped by continuation of cess beyond five years. In the 7th meeting, the chairman observed that there was constitutional commitment for the Centre to provide 100% compensation (to the States). These were said when the Act was being drafted. Now they are saying that it is not possible. This is unconstitutional. It has become a khichdi.
What will you do if the Central government
does not accept the demands?
I hope that all States will make sure that these unconstitutional proposals by the Centre are rejected. The Centre should borrow from the market and give it to the public account fund, which can then be transferred to the States.
During lockdown, tax was hiked on diesel and later rolled back. Will there be any such measures in the future?
The hike was a temporary measure for the lockdown period. We are big advocates of “lower the taxes, better the compliance”. I doubt that any tax increase at this point will help. I personally believe that plugging the loopholes in implementation [of Goods and Services Tax] should be the first priority. For instance, among 15,000 large traders, 9,000 odd have not filed GST returns to the government for Q4 of last year, which was a normal year. If the GST systems are proper, then we could fix it in a matter of minutes. There is a slowdown, but I still feel that without raising tax, we can raise more money by fixing the issues.
How are you planning to boost tax revenue collection?
Fixing loopholes is the main way. We cannot raise taxes when the economy is at -23%. It would be a stupid idea to increase tax.
During lockdown, financial assistance was given to vulnerable groups such as drivers and construction workers. Will such schemes continue?
Right now I do not have money to pay salaries. But we are opening up markets by being careful of health concerns.
Do you think VAT was better than GST?
VAT system had a lot of problems due to inter-State trade. Goods and services tax is a better idea. But you have to make systems to implement it. The Central government did not make these systems and are now blaming “act of god” [the pandemic] for it.