Five states reject govt’s GST shortfall remedy

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Five states that are not ruled by the Bharatiya Janata Party (BJP) on Monday rejected the proposal mooted by the central government at last Thursday’sGoods and Services Tax (GST) Councilmeeting that states could borrow to meet their currentGST revenue shortfall.

The governments of Punjab, Delhi, Kerala, Telangana and West Bengal agreed at a meeting of their finance ministers to reject both the borrowing options proposed by the Centre, Chhattisgarh finance minister T.S. Singh Deo said in a tweet.

They also decided that the Centre should not delegate its constitutional obligation of meeting the revenue gap to the states. The position taken by the states is significant considering that political differences on GST related issues could echo in the monsoon session of Parliament.

The council had on Thursday offered states two borrowing options to tide over theirGSTrevenue shortfall as the GST cess collected from items such as cars and tobacco was not adequate to compensate them this financial year.

States could either borrow 97,000 crore from theReserve Bank of India(RBI) or take 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 manner,” Deo said.

Kerala finance 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 finance minister Manpreet Singh Badal said in a letter to Union finance minister and GST Council chairperson Nirmala Sitharaman that both the borrowing options offered were a breach of the constitutional assurance of compensation to states. “We thus take both the options with great regret as a clear breach of the solemn and constitutional assurance by the central government. We believe thi

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