Soon after Finance Minister Nirmala Sitharaman chaired the 41st meeting of the GST Council on Thursday, 27 August, the finance ministry drew flak over its decision to ‘deny GST compensation’ to states.
Several Opposition leaders attacked the government for asking state governments to borrow money from the RBI.
Delhi finance minister Manish Sisodia, in a press briefing, said that the Centre has refused to pay GST compensation to the states and has asked the states to borrow money from RBI to compensate for revenue shortfall.
He further added that the Centre had earlier promised to pay GST compensation to the states, but now they have backed out due to coronavirus pandemic.
Chhattisgarh finance minister TS Singh Deo also expressed grief over Centre’s decision. “Sad state of affairs in GST Council as it is increasingly yielding to majoritarianism instead of being consensual,” he said, as reported by PTI.
'Centre Should Activate Dispute Resolution Mechanism': Punjab FM
Attacking the government, Punjab finance minister Manpreet Badal said that the government shouldn’t thrust solutions on state governments, but should activate a disputes resolution mechanism. He further added that the Congress-ruled states are not happy with the outcome of the GST Council meeting.
Puducherry Chief Minister V Narayanasamy said that, "Being a Union Territory, it will be a big problem for Puducherry, as we have to go for market borrowing, and get permission from the RBI, it has to go through home ministry and its not possible for us to borrow money directly,” reported ET Now.
Earlier, the Union finance minister said that the government has discussed two options of GST compensation with the states, including that Centre will talk to RBI and help wit G-security linked interest rates, so that each state does not have to struggle for loans.
Sitharaman mentioned that the states have asked the government to give them seven working days to think about the options. These options would be available only during the current year, and the situation would be reviewed next year, reported news agency ANI.
Sitharaman further stated that “once an arrangement is agreed upon by the GST Council, the government can proceed fast and clear the dues.”
(With inputs from PTI and Financial Express)
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)