Driving Naari Programme launched in Chandigarh
New Delhi
Battlelines have been drawn for Thursday’s special GST council meeting after seven opposition chief ministers decided to press the Centre to borrow from the markets to pay four months of revenue collection dues.
Representatives of Kerala and Delhi are likely to join forces with them at the meeting.
The seven opposition CMs, including Capt Amarinder Singh, attended a webinar with Congress president Sonia Gandhi and discussed plans to approach the Supreme Court as well as call on the President or PM to implement the Centre’s obligation to pay states the promised GST compensation.
Story Highlights
Centre should borrow on their behalf
More products under compensation cess
Extend GST compensation cess for 5 more years
On-time payment of compensation at the promised 14%
The resolve to take on the Centre was also expressed by other participating CMs, including Mamata Banerjee, Hemant Soren, Ashok Gehlot, Uddhav Thackeray, Bhupesh Baghel and V Narayanasamy. Other states whose CMs did not participate but are expected to join forces are Delhi and Kerala.
As Capt Singh said, “All of us must collectively see the PM and tell him about the situation. We have given all powers of taxation to them (Centre). Now they say they won’t be able to pay. How do our states run,” he asked.
On the other hand, sources have indicated that the Centre will ask the states to borrow from the market according to their requirements while it would be willing to backstop the loan with sovereign guarantees.
Union Finance Minister Nirmala Sitharaman is expected to point out that the entire revenue collection exercise is a collective responsibility and while the Centre would be willing to do its best, states should also partly share the burden. This cooperative approach is a far cry from the early days of the pandemic when the Centre had sought to impose stiff conditionalities if the states wanted to borrow more.
The Centre is also likely to point out that the pandemic was an unexpected force majeure event whose impact was never anticipated when promising a 14 per cent increase in states’ compensation. This approach, if it convinces the GST Council, may give some relief to the financially beleaguered Central Government.
The Centre is also likely to suggest some tweaking of GST to bring in additional revenue but the centre-stage will be taken by a discussion on who will shoulder the burden of borrowings to make up for the GST shortfall.
The Centre has already scrounged to raise Rs 70,000 crore as cess collection was Rs 95,444 crore for 2019-20 and the transfer to states was Rs 1,65,302 crore. In this fiscal, the shortfall could be nearly Rs 2 lakh crore.
