West Bengal CM Mamata Banerjee has said that depriving states of the settlement was a “betrayal of the trust and moral responsibility of the Government of India towards the states, violating the very premise of federalism”.
The Centre had said the states could borrow to meet the return shortfall of Rs 2.35 lakh crore.
Rejecting the proposal, Banerjee, in a letter to Prime Minister Narendra Modi on Wednesday, said: “The Centre must borrow to meet the shortfall at this critical hour of the Covid-19 pandemic, and I am sure that the states will reciprocate in supporting a resolution that cess collection continues beyond the five years till the entire debt of the Centre is liquidated along with the entire interest payment cost.”
Saying that the Centre has the “power to monetise its debt”, Banerjee said: “Also, Government of India gets a much lower interest on such borrowing… Furthermore, the Government of India can raise the resources to service its debt, while the states cannot service huge additional debts when their finances are on the verge of collapse.”
Four other non-BJP ruled states have sent similar illustrations to the Centre. Telangana Chief Minister K Chandrashekar Rao, Delhi Chief Minister Arvind Kejriwal and Tamil Nadu Chief Minister Edappadi K Palaniswami have written to Modi. Chhattisgarh Chief Minister Bhupesh Baghel has written to Finance Minister Nirmala Sitharaman.
“The GST council committed that the Centre will pay compensation. But now they are defaulting on their commitment. This is our rightful due… Due to the pandemic, we are already drowning in debt. There is no earning for the past 5-6 months,” Banerjee said at a press conference.
“Instead of helping the states, is it proper for the Centre to stop assistance to the states and thrust more financial burden on them,” she said.
Banerjee also sought to remind Modi that when he was the Gujarat chief minister, he had opposed the implementation of GST on various grounds.
BJP-ruled Karnataka on Wednesday said it has decided to opt for the first option. The decision was taken after Chief Minister B S Yediyurappa, who also holds the Finance portfolio, held discussions with Finance department officials.
“After the evaluation of both these options, it is felt that option 1 would be more beneficial to the State’s finances,” said an official release from the Chief Minister’s Office.