The Centre has worked out an outreach plan towards the States to tone down their rhetoric against the ruling BJP diluting the federal nature of the fiscal policy.
Funnelling cess collections towards improvement of rural infrastructure, ensuring release of weekly instalments of GST shortfall compensation, retrieving about ₹1,048 crore lost by Punjab on account of miscalculation of base year for assessment from the Consolidated Fund are part of a concerted effort to evolve a better working equation with the States which have consistently accused the Centre of robbing them of their fiscal autonomy.
Top sources in the Finance Ministry told BusinessLine that special care went into retrieving ₹1,048 crore to Punjab, a State aflame with protests against the Centre’s farm reform laws.
“For no fault of the Centre, there was a loss to Punjab. It was retrieved from the Consolidated Fund,” said the sources.
The Ministry’s quiet manoeuvres come in the midst of highly-charged political atmosphere where farm protests have fuelled the Opposition’s rhetoric inside and outside the Parliament.
The Ministry is also working overtime to ensure the release the weekly instalments to compensate States and UTs for the GST shortfall.
The instalments are being deposited to the States every week on Monday since October, 2020 when the Centre had set up a special borrowing window to meet the estimated shortfall of ₹1.10 lakh crore drop in revenue arising on account of implementation of GST.
“Every week, Monday-on-Monday, the instalments are deposited at special interest rates,” said the Ministry sources.