Congress cites CAG report on states’ debt, accuses centre of 'coercive federalism'

NEW DELHI: Expressing concern over the appreciable jump in states’ debt highlighted by the CAG, Congress said the public debt of states has tripled in the last decade, rising from Rs 17.57 lakh crore in 2013 to Rs 59.60 lakh crore in 2022. The party said the states are victims of “coercive federalism” being followed by the Modi government which is not sharing revenues with them as desired, accusing the centre of playing “cess politics”.

AICC spokesman and Rajya Sabha MP Randeep Surjewala said the public debt of states now amounts to 23% of the combined GSDP of 28 states, but the states are being stripped of their fiscal independence through the Modi government’s handling of the GST Compensation Cess and arbitrary central levies. He said this has resulted in “double jeopardy” for states of mounting debt and shrinking revenues.

“Rs 1,70,000 crore is collected every year from ‘cesses and surcharges’, but the centre keeps it without sharing anything with states. ‘Compensation Cess’ was created to pay the states for GST losses, which ended in June 2022. Now, the same cess is only used to repay Central loans. Beyond Oct 2025, there is no constitutional mandate to continue with it, yet the Centre wants to hold it exclusively,” he said, demanding that the Centre share the cess with the states for the coming ten years.

Surjewala said there appears to be a deliberate attempt to cripple the states and hollow out their functionality, to unionise power in the hands of the Centre. “This is ‘coercive federalism’ that seeks to convert the states into ‘glorified municipal committees’,” he added.

The Congress MP warned that post rate cuts, GST collections will dip steeply in the future, with the shortfall likely to be Rs 40,000 crore as per the Centre and Rs 80,000 crore as per the SBI, while other estimates peg it at Rs 1.5-2.5 lakh crore. “The states will lose half or more of this, but neither GST nor Cess will flow to them,” he said.

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