Post the demonetization move; most of the states in India have reported a revenue loss in the order of thousands of crores and are seeking compensation from the central government for the loss in revenue. They have also stated that there will be a slowdown in implementing welfare schemes meant for the weaker sections of the society due to the demonetization move and loss of revenue. A 30 – 40% fall in revenue from three major sources such as excise, property registration and value added tax (VAT) has led to the states of India incurring revenue loses in the order thousands of crores. “There is some concern among states that demonetization has lead to revenue loss and they face a finance crunch in implementing welfare schemes”, said a senior finance ministry official after a meeting with the Finance Minister, Arun Jaitley. The state finance ministers are going to roll out the Goods and Service Tax (GST) from the next financial year (2017). The states of India want the Centre to compensate by providing additional money in the supplementary budget to be presented in the winter session of Parliament. Read more on Loses
The Telangana government on Monday wrote to the central government seeking funds and release of Central Sales Tax arrears to meet its expected revenue loss of Rs. 3000 crores. The Andhra Pradesh government has sought similar assistance and supply of ‘point of sale’ machines at 80% subsidy for its liquor shops and bars. A.P. government has recorded a 50% fall in revenue since the demonetization move was announced. The Tamil Nadu government is assessing the amount of revenue loss and will be seeking re-imbursement. “Demonetization move has impacted all, from the government to poor people”, said AIADMK spokesperson and former finance minister, C Ponnaiyan. Other states like Uttar Pradesh, Bihar and West Bengal are also assessing the revenue loss, after which they may seek compensation, officials said. BJP governments in Haryana, Madhya Pradesh and Jharkhand have also reported declines in revenues by 20-30% but have not yet decided to seek compensation. While the state governments across India have enough money to pay the salaries of government employees for the next month, they said that there will be a slowdown in the implementation of welfare schemes meant for the weaker sections of the society due to the cash crunch owing to revenue loss. They said that welfare schemes like pensions, MGNREGA and funding of infrastructure projects will be affected. Read more on Startup News
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