• Bihar Deputy Chief Minister Sushil Modi will head the seven-member committee to look into revenue shortfall being faced by the states after the GST roll-out, and suggest steps for augmenting collections.
• The GST Council, headed by Finance Minister Arun Jaitley and comprising state ministers had decided to set up a group of ministers (GoM) to analyse reasons for shortfall in revenue collections by the states since July 2017.
• As per terms of reference (ToR) of the GoM, the Modi-led committee will undertake data analysis using econometric and statistical tools and suggest “suitable measures/policy intervention” for course correction for revenue augmentation, particularly for the states suffering high revenue shortfall.
• Among other things, the committee would also take into account trends of revenue collection before and after the implementation of goods and services tax (GST).
• It would also look into structural patterns of major sectors of the economy impacting revenue collection, including the services sector.
• The GoM, as per the ToR, would identify reasons for deviation in revenue collection trends, compare it with original assumptions worked out at the time of design and implementation of GST.
• The other members of the GoM include Punjab Finance Minister Manpreet Singh Badal, Kerala Finance Minister Thomas Isaac, Karnataka Rural Development Minister Krishna Byre Gowda, Odisha Finance Minister Shashi Bhushan Behera, Haryana Taxation Minister Capt Abhimanyu and Goa Panchayat Minister Mauvin Godinho.
• Out of 31 states, only Andhra Pradesh and five north eastern states Mizoram, Andhra Pradesh, Manipur, Sikkim and Nagaland have recorded revenue increase post the GST roll out.
GST Collection data
• Several states including Punjab, Himachal Pradesh, Chattisgarh, Uttarakhand, Jammu and Kashmir, Odisha, Goa, Bihar, Gujarat and Delhi are facing revenue shortfall following the implementation of goods and services tax (GST).
• These states are facing revenue shortfall in the range of 14-37 per cent in the April-November period.
• Among the union territories, Puducherry is facing maximum shortfall of 43 per cent.
• The central government has released Rs 48,202 crore as GST compensation to states during April-November 2018, higher than the Rs 48,178 crore paid in the previous financial year.
• GST was rolled out on July 1, 2017. As per the GST law, the centre compensates states to ensure that their revenue is protected at the level of 14 per cent over the base year tax collection in 2015-16.
Mains Paper 3: Economy
Prelims level: GST revenue shortfall