Bangalore: Contrary to what the former Deputy Chief Minister Siddaramaiah had claimed, the Government has now stated that it has incurred a loss of Rs. 600 crores so far following the introduction of the value added tax (VAT) regime and has sought compensation in full from the Centre.

Finance Minister P.G.R. Sindhia on Tuesday said the Government has written to the Union Finance Ministry claiming compensation of Rs. 600 crores towards the loss incurred in the first quarter of the financial year.

He told presspersons that the Centre is verifying the declaration of the State Government in consultation with the Comptroller and Auditor General of India before finalising the compensation due to the State Government. Another application for compensation for the months of July, August and September will also be made, he said.

Disputes statement

Disputing the statement that there was a 27 per cent growth in tax collection in the first quarter, Mr. Sindhia said that in fact the VAT collection is minus five per cent compared to the tax collected during the corresponding period last year. He said that Karnataka and Maharashtra had high tax rates and incurred heavy losses, and that has now resulted in the State being compelled to claim compensation.

He said the Centre has set apart Rs. 5,000 crores exclusively for compensating the States that incur losses by implementing VAT and he does not understand why the Government had earlier projected that there was a positive growth, and hence there was no need to claim compensation. The governments of Andhra Pradesh and Kerala have already claimed and received compensation, he added.

Fluctuating revenue

Mr. Sindhia said Karnataka would have lost almost Rs. 1,000 crores, had it not made any claim before the Union Finance Ministry. He, however, maintained that there is no need for any anxiety despite the delay in filing the compensation claim. He did not quantify the exact loss in the second quarter as the VAT revenue keeps fluctuating every month. In October, it was high.

Referring to the threat by the Janata Dal (S) rebel MLA B.R. Patil that he would move a privilege motion against Mr. Sindhia for misguiding the Legislative Assembly on VAT collection, the Finance Minister said that he has given the true picture. It is up to Mr. Patil to view the facts in the right perspective.

But Mr. Sindhia was not ready to attribute the statement claiming 27 per cent growth in tax collection to his predecessor, Siddaramaiah.

Reacting to the criticism by Karnataka Pradesh Congress Committee President M. Mallikarjun Kharge on the reported delay on his part in placing before the State Cabinet a communication received from the Union Urban Development Ministry on financial clearance for the Metro Rail Project for Bangalore, Mr. Sindhia said he is yet to see the letter.

Though his predecessor, Mr. Siddaramaiah had given in-principle clearance to the Centre's proposal, it is the State Government that has to give financial clearance.

He had asked Chief Secretary B.K. Das to hold a meeting of officials concerned on the issue. Then the file would come to him and he would place it before the Cabinet for approval. As Finance Minister, he said it is his duty to look into the financial implications as the project involves a heavy annual burden of Rs. 1,000 crores on the State exchequer. He even urged the Centre to replicate the financial support given to the Delhi Metro Rail for Bangalore also.

Rain damage

Mr. Sindhia said he is planning to announce a special package for repairing roads damaged during the recent rain in Bangalore as desired by Chief Minister N. Dharam Singh.

The Department of Infrastructure Development is also taking up the issue of laying a dedicated railway line from the proposed Devanahalli airport to Bangalore at a cost of Rs. 1,000 crores, he added.

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