AHMEDABAD: The Goods and Services Tax is set to become a big challenge for the otherwise "financially prudent" Gujarat once the 14 per cent compensation commitment of the centre winds up, 15th Finance Commission Chairman NK Singh said on Monday.
"One of the big challenges Gujarat is facing is GST collections. Once the 14 per cent guarantee as GST compensation by the union government winds up, Gujarat will need to look at the GST collection projections seriously and tax buoyancy may become an issue," Mr Singh, who is heading a team of the commission on a visit to Gujarat, told reporters in Ahmedabad.
Gujarat is the sixth state the Finance Commission is visiting.
Mr Singh said the Finance Commission is impressed with Gujarat's performance in reducing and keeping in check the debt to GDP ratio "tantalisingly close to 20 per cent-mark", as stipulated by the new Fiscal Responsibility and Budget Management Act (FRBM) Act.
This target, otherwise, is to be achieved nationally by 2023-24, he said. "Gujarat leads all the states in this aspect and even in the best performing states," the Finance Commission chairman said.
Gujarat has maintained its fiscal deficit well below the three per cent benchmark under the FRBM Act.
"Gujarat's capital expenditure has been rising and it is in full compliance in key economic parameters which contribute to long-term healthy economic growth," Mr Singh added.
The Finance Commission has said the Gujarat government is late in giving top priority in improving its spending on health and education, "areas which deserve fuller attention over the coming years".
Pointing this out, Mr Singh said the state has now realised the need for a more holistic approach to growth along with impressive industrialisation and "has shown the lead in achieving more balanced development among primary, secondary and tertiary sectors".
News Source : https://www.ndtv.com/india-news/gst-big-challenge-for-gujarats-future-finances-finance-commission-chairman-nk-singh-1888420