IT Correspondent
New Delhi, Oct 13:
No consensus was arrived at’ on the way to make up for GST shortfall of states, in a meeting of the GST Council held on Monday, with some of the states seeking the clarification on borrowing.
Addressing the media after chairing the GST Council meeting, Union Finance Minister Nirmala Sitharaman said that the Centre cannot borrow to make up for the shortfall of states as it will lead to rise in borrowing cost.
“The states asked some specific clarifications, which were given. Many of the clarifications were on the Attorney General’s opinion on borrowing, GST Council’s authority to extend cess collection beyond five years,” she said.
After Thursday’s meeting, while 12 states accepted the Centre’s proposal to borrow from the markets, nine others placed the onus of borrowing on the Government of India, with the finance minister seeking time to consider the latter’s demands. “States borrowing does not mean a chaotic situation. We will facilitate states so that some states end up paying high-interest rates while others obtain loans at a reasonable rate,” Sitharaman said.
The meeting – which saw the participation of Union Minister of State Anurag Thakur, along with the finance ministers of states and Union territories – was held to discuss the contentious issue of GST compensation. This was the third time the council met to discuss the issue of funding the shortfall of Goods and Services Tax (GST) revenue of states.
In order to fill the gap, during a meeting in August, the Centre had given two options of borrowing to the states. One, borrow Rs 97,000 crore from a special window facilitated by the RBI. Two, borrow the entire expected shortfall of Rs 2,35,000 crore this year.
