Calcutta: West Bengal Finance Minister Amit Mitra said on Sunday that the Center’s suggestion to states to borrow to cover the shortfall in goods and services tax (GST) revenue is “totally unacceptable” as it would destroy its financial health and would lead to the “raw power of centralism.
At the 41st GST council meeting on August 27, Union Finance Minister Nirmala Sitharaman said that the COVID-19 pandemic is an “act of God” that affected GST collection and ruled out paying compensation. to the states of their coffers.
In the name of the “act of God,” a huge debt is being imposed on the states that will destroy their financial health and federalism will be crushed giving rise to the “raw power of centralism,” Mitra said.
“We find it totally unacceptable,” Mitra said at a virtual press conference.
He claimed that 15 large states, including some ruled by the BJP, opposed Sitharaman’s suggestion and said the Center should borrow.
Mitra said that GST Network founder Nandan Nilekani made a statement to the GST Board that the total loss of revenue due to fraudulent transactions is ₹70,000 crore.
“So is this an act of God or an act of fraud?” asked the Finance Minister of West Bengal.
Mitra said that Sitharaman on March 14 before COVID had said that the Center is obligated to compensate states.
“Now they are saying the opposite. This is a total subterfuge,” he added.
According to him, if states borrow, returns will suffer.
“Why doesn’t the Center borrow directly? The Center can monetize debt by printing money that states cannot,” he said.
Mitra said RBI had even said that the Center can borrow directly from the main bank window.
According to the Center’s calculations, the states’ compensation requirement in the current fiscal state would be ₹3 lakh crore, of which ₹65 billion rupees would come from tax collection.
Out of the deficit of ₹2.35 crore lakh, the deficit due to GST implementation is ₹Rs 97 billion and the rest is due to the impact of COVID-19.
The Center has given states two options: borrow all the ₹2.35 crore lakh or borrow only ₹97,000 crore through a special window, to be provided by the RBI, to cover the revenue shortfall.
Mitra said that the Fiscal Responsibility and Budget Management (FRBM) limit has not been relaxed, and therefore, unlike the Center, states have no room to borrow.
He said West Bengal was already running a revenue shortfall of ₹15,000 crore and exhausted the FRBM limit.
“We hope to have a collective decision on this matter very soon and seek more clarity from the Center,” Mitra said.
This story was published from a news agency feed with no changes to the text. Only the title has been changed.
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