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14 Five states reject govtʼs GST

shortfall remedy

on 01st Sept 2020,Tuesday “We thus take both the options with great regret as
The GST Council had offered the states 2 borrowing a clear breach of the solemn and constitutional

options to tide over GST revenue shortfall. assurance by the central government. We believe
States could either borrow Rs.97,000 crore from RBI or this is a betrayal of the spirit of cooperative
take Rs.2.35 tn from market under different terms. federalism that formed the backbone of the GST
Five states that are not ruled by the Bharatiya Janata journey so far," said Badal.
Party (BJP) on Monday rejected the proposal mooted by Mint has seen a copy of the letter.
the central government at last Thursday’s Goods and Delhi deputy chief minister Manish Sisodia, who
Services Tax (GST) Council meeting that states could also holds the nance portfolio, said the states

borrow to meet their current GST revenue shortfall. resolved that the only legally tenable option to tide
The governments of Punjab, Delhi, Kerala, Telangana and over the crisis was for the central government to
West Bengal agreed at a meeting of their nance borrow the entire shortfall from RBI or any other
ministers to reject both the borrowing options proposed suitable mechanism. “The repayment of the
by the Centre, Chhattisgarh nance minister T.S. Singh principal and the interest liability should start from

Deo said in a tweet. 2022 and should be entirely serviced out of the
They also decided that the Centre should not delegate its receipt from the cess for which the GST Council
constitutional obligation of meeting the revenue gap to should extend the period of levy of cess beyond
the states. The position taken by the states is signicant ve years or till the time it is required to repay the
considering that political differences on GST related debt," said Sisodia.
issues could echo in the monsoon session of Parliament.

The council had on Thursday offered states two borrowing
options to tide over their GST revenue shortfall as the
GST cess collected from items such as cars and tobacco
was not adequate to compensate them this nancial year.
States could either borrow Rs.97,000 crore from the

Reserve Bank of India (RBI) or take Rs.2.35 trillion from
the market under different terms.
“It was agreed among the states that the Centre should
make good the shortfall and most importantly should only
move through consensus in the GST Council instead of
trying to push through its agenda in a majoritarian Punjab, Delhi, Kerala, Telangana, and West Bengal ministers decided
that the Centre should not delegate its obligation of meeting the
manner," Deo said.
revenue gap to the states.
Kerala nance minister T.M. Thomas Isaac said the states
were left with no option. “Now that we fully understand
Centre’s intentions on GST compensation, we have no
choice other than to reject them lock, stock, and barrel...

No more surrender of states’ rights," Isaac tweeted.
Punjab nance minister Manpreet Singh Badal said in a
letter to Union nance minister and GST Council
chairperson Nirmala Sitharaman that both the borrowing
options offered were a breach of the constitutional
assurance of compensation to states.

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