Finance Ministry rejected Centre’s proposal which comprised of state could borrow to meet the compensation deficit under Goods and Services (GST) regime. Nirmala Sitaraman have said the borrowing should be done by the Centre instead.
— Economic Times (@EconomicTimes) August 29, 2020
Telangana Chief Minister Chandrashekhar Rao, Delhi Chief Minister Arvind Kejariwal and Tamilnadu Chief Edappadi K Palaniswami have written a letter to Prime Minister Narendra Modi and rest includes Chhattisgarh Chief Minister Bhupesh Baghel has written to Finance Minister Nirmala Sitaraman.
After two days from GST council meeting last week, finance ministry suggested two options and Centre detailed the borrowing solutions to the states for meeting and fulfilling the compensation shortfall of Rs 2.35 lakh crores.
A full interview given to The Indian Express Kerala Finance Minister Thomas Issac said, “the states are not only rejecting the Centre’s proposal, but proposing a third option – that the central government borrows the full compensation and the states agree to extend the cess for a sufficiently long period to recoup this amount.”
“Central borrowing is very simple, they can directly borrow from the markets… but if they are afraid that interest rates will rise and so on, monetise the debt. Simple. That’s what all the countries are doing,” he said.
Several challenged the options as well while some accepted. Lastly voting on the issue may come up as a solution to this. GST Council meeting which will be held at September 19.
“The GST compensation law provides for calculation of compensation loss and there’s no distinction on account of Covid, so the distinction being made by the Centre is “illegal”, and can be challenged in court.
“Be sure that we are not going to give up this issue. This is a constitutional right, they cannot take away the rights of the states,” he said.