NEW DELHI, Aug 29: Senior Congress leader and former finance minister P Chidambaram on Saturday accused the Centre of absolving itself of any financial responsibility towards states by putting before the GST Council two options for borrowing by states to meet the shortfall in GST revenues, pegged at Rs 2.35 lakh crore in the current fiscal.
In a series of tweets, Mr Chidambaram said that under the second option given to the states, the entire financial burden would fall on them.
”The central government is absolving itself of any financial responsibility. This is a gross betrayal as well as a direct violation of the law. Under the second option, states are asked to borrow from the RBI window. It is more market borrowing, only by a different name. Again, the entire financial burden falls on the States,” he said.
The Centre on Thursday placed before the GST Council two options for borrowing by states to meet the shortfall in GST revenues, pegged at Rs 2.35 lakh crore in the current fiscal.
Briefing reporters after the 41st meeting of the GST Council, Finance Minister Nirmala Sitharaman said the economy is facing an extraordinary ‘Act of God’ situation, which may result in economic contraction.
As per the Centre’s calculation, the compensation requirement by the states in the current fiscal would be Rs 3 lakh crore, of which Rs 65,000 crore is expected to be met from the cess levied in the GST regime. Hence, the total shortfall is estimated at Rs 2.35 lakh crore.
Revenue Secretary Ajay Bhushan Pandey said of this, Rs 97,000 crore is on account of GST shortfall, while the rest is due to the impact of COVID-19 on the economy.
Pandey said a special window can be provided to the states, in consultation with the RBI, at a reasonable interest rate for borrowing of Rs 97,000 crore. The amount can be repaid after five years (of GST implementation) ending 2022 from cess collection.
The second option before the states is to borrow the entire Rs 2.35 lakh crore shortfall under the special window.”States have been given seven days’ time to think over the proposal,” Pandey said.
Taking a jibe at the Finance Minister terming the Covid pandemic as an ‘Act of God ‘, the Congress leader said, ”If the pandemic is an ‘Act of God’, how do we describe the mismanagement of the economy during 2017-18 2018-19 and 2019-20 BEFORE the pandemic struck India? Will the FM as the Messenger of God please answer?”The Congress has been criticising the non payment of GST dues to the states and has termed it as a betrayal of trust of the people.
(UNI)
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