October 14, 2020 3:02:38 am
A day after the Goods and Services Tax (GST) Council failed to arrive at a consensus on the impasse between opposition-ruled states and the Centre for the compensation shortfall, the Centre on Tuesday gave its nod for 20 states to elevate Rs 68,825 crore through open market borrowings to meet the GST revenue deficit.
The 20 states which have opted for Option 1 — borrowing via a particular window facilitated by the Reserve Bank of India and Finance Ministry — embrace Andhra Pradesh, Maharashtra, Madhya Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Odisha, Sikkim, Uttar Pradesh, whereas eight states are but to select their possibility.
“Additional borrowing permission has been granted at the rate of 0.50 per cent of the Gross State Domestic Product (GSDP) to those States who have opted for Option-1 out of the two options suggested by the Ministry of Finance to meet the shortfall arising out of GST implementation,” the Finance Ministry stated.
Opposition-ruled states had objected to the method, which might see a authorized problem going forward. Chhattisgarh Commercial Taxes Minister TS Singh Deo stated the Centre has let down the states and that the Government of India ought to take a mortgage which will probably be serviced totally by GST Compensation Cess Fund.
“Everyone who respects our federal structure should come together & stand with rights of the state to receive their Constitutional & Legal dues. The Central Govt has let down the States in this hour of need and has failed to perform it’s solemn Constitutional and Legal Obligations,” he posted on Twitter.
Kerala Finance Minister Thomas Isaac had stated Monday that the announcement that 21 states will probably be allowed to select Option 1 is “illegal”. “Option one involves deferment of compensation payment beyond 5 years for which a Council decision is necessary as per AG’s opinion. No such decision has been made in the Council,” Isaac had posted on Twitter.
A high authorities supply stated that “no consensus does not mean no decision” and the states that need to go forward to go for the borrowing possibility are being allowed, whereas the dissenting states will probably be paid compensation out of cess collections as and when assets are generated.
“We will fill the gap (in compensation shortfall) as and when we can fill it. We will facilitate opposing states as and when they approach us,” sources within the central authorities stated.
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