Centre’s option to let states borrow a burden: Arvind Kejriwal to PM Modi

In the GST Council meeting held last week, states were presented with two options to resolve the issue of compensation shortfall, both of which meant that states would have to borrow money.

“The two options of borrowing presented by the Ministry of Finance, which primarily require the states to borrow and then meet repayment liabilities will put an extremely onerous burden on states which are, as it is, reeling under financial crisis due to shortfall in revenue collection and an increased commitment of expenditure emerging from Covid-19 response,” Kejriwal said in the letter to PM.

He also said the present situation could lead to a trust deficit between the Centre and states.

“To create an artificial distinction between loss occurring due to implementation of GST and those occurring due to Covid-19 pandemic goes against the very spirit of the Compensation Act and will lead to a creation of a trust deficit between the Centre and the states, wherein in future, the states will be hesitant in coming together to achieve more such larger common national goals, as was done through the implementation of GST,” he said.

The Centre and non BJP-ruled states have been in disagreement over financing of the Rs 2.35 lakh crore GST shortfall.

As per the Centre’s calculation, about Rs 97,000 crore of the shortfall is because of GST implementation while the rest is the impact of Covid-19.

On Monday, Delhi Finance Minister Manish Sisodia met his counterparts in West Bengal, Punjab, Chhattisgarh, Kerala, and Telangana, where options to the Centre’s proposal were discussed.