Tamil Nadu Chief Minister M K Stalin on Thursday urged Prime Minister Narendra Modi to bring the Goods and Services Tax for COVID-19 vaccines and drugs to zero level. Pending GST compensation and subsidy on rice should be released immediately and adhoc grants-in-aid must be provided as the Centre has not shared with states the revenue from additional levies on fuel, he said in a letter to Modi.

Also, Stalin wanted the borrowing limit increased by one more per cent from the current three per cent of Gross State Domestic Product.

In the wake of lower economic growth due to the impact of the Covid pandemic and reduction in the revenues earned by the states, Stalin has suggested action on three fronts by the Centre to help the states –

  1. Immediately release pending GST compensation dues to states as also the funds meant for subsidized PDS rice;
  2. # In the wake of additional revenues generated by the Centre through cess on sale of petroleum products and which have not been shared with the states, the Centre should release ‘Ad hoc Grants-in aid’ to states to compensate their revenue losses; and
  3. # The borrowing limits of the states, in respect to the SGDP, should be increased to 4% from the present 3% to enable the states to meet their additional expenditures

His letter to PM Modi came a day after the Congress party, which fought Tamil Nadu assembly polls along with the DMK, accused the government of seeing an opportunity in crisis by imposing GST on Covid vaccines and medicines. The party claimed that the Centre has collected over ₹6,000 crore from such taxes.

“The government should not miss the last bus and should act now. Have a vaccine policy in which all Indians will be vaccinated in the next six months, then only we can defeat coronavirus,” Congress spokesperson Gaurav Vallabh said.

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