The Ministry of Finance may offer a special package to states keeping in view their financial distress, as the compensation regime for the goods and services tax (GST) ends in June this year.
However, earlier many starts have demanded extension of period of GST compensation by five years beyond 2022 in the next GST Council meet.
As per the officials in the finance ministry, the government is aware of the financial difficulties of some states and is working on both short-term and long-term measures to support them. “Some states have genuine difficulty, mainly hill states. Some states have also requested permission for a special levy,” a senior ministry official told.
Accordingly, the package may be discussed at the next GST Council meeting and could include financial assistance for specific projects, permission for a special levy and flexible borrowing options among others.
Further, with assistance from the Niti Aayog, the government is also planning to help revenue-deficit states identify projects and sectors that can shore up revenue collections. “All these options are being looked at and will be discussed at the next GST council meeting,” the official said.