State finance ministers meet Jaitley ahead of budget presentation

Finance ministers of states met Union Finance Minister Arun Jaitley on Thursday to seek clarifications on some issues and to discuss various confidence building measures that may be considered for inclusion in the proposed fiscal 2014-15 budget to be presented on July 10.

Among those present in the meeting were West Bengal Finance Minister Amit Mitra, Jammu and Kashmir Finance Minister Abdul Rahim Rather and Punjab Finance Minister Parminder Singh Dhindsa.

"There was no consensus on many issues. Many issues were unclear. All the members raised their opinions. It is important to have a consensus before presenting the budget. How can we support on issues in which we don't have an agreement? State revenue mustn't be affected. Goods and Services Tax (GST) can happen only when there is confidence building. There was around 4,300 crores loss due to no compensation. We discussed unclear issues, and areas where we unanimously disagreed were discussed. Petroleum and entry tax cannot be included in GST," said Mitra.

Amid the rising inflation due to recent price hikes announced by the government on rail, fuel and onions, the main agenda of the meeting was to discuss as to how to bring in GST and what all should be included in it.

"We have certain areas of disagreement between centre and state governments. We have made a consensus that petroleum must be outside GST. When GST compensation is implemented, central government must compensate for the losses of the state government. They haven't made it as a constitutional amendment. State governments want it to be included in the Constitution. Certain issues were addressed and resolved. There is now consensus between state and central governments on GST. We have agreed to what is pointed in the latest draft. Government of India has the power on declared goods to fix the price," said Rather.

Meanwhile Dhindsa said, "We discussed on revised the Constitutional Amendment Bill. We had differences on inter-state pay and GST. Food inflation is a serious issue now. Both state and central governments have taken steps to control the price hike. It will be growth-oriented budget. Centre will take confidence building measures to bring in foreign and domestic investments."

On Wednesday, Jaitley had said that high fiscal deficit and inflation were major challenges for the country.

Jaitley's comments add to expectations that he could unveil tough fiscal consolidation measures in his first annual budget on July 10.

An interim budget set a deficit target of 4.1%  of GDP for the financial year that began in April, but the fiscal gap has already risen to 2,408.37 billion rupees, or 45.6% of the full-year target.