Former Finance Minister P Chidambaram tweeted today about the outcome of the GST Council meeting (Archive)
New Delhi:
Congressman P Chidambaram has congratulated the 10 states that “stood firm and rejected” the central government’s suggestion to borrow money to offset the GST compensation owed to them, an issue that has emerged as a point Delicate between a cash-strapped center and the state / UT governments.
In a series of tweets posted Tuesday afternoon, Chidambaram (who served as Union Finance Minister in the congressional-led UPA government) said that because it was the center that was obligated to pay, ” naturally, the responsibility for finding the resources also rests with the central government. “
“I congratulate the nine or ten states that stood firm and rejected the two options given by the center to close the gap in GST compensation payment. The responsibility to provide GST compensation to its full extent rests with the center, as grudgingly admitted the finance minister yesterday, “Chidambaram tweeted.
I congratulate the 9-10 states that stood firm and rejected the two options given by the central government to close the gap in the GST compensation process.
– P. Chidambaram (@PChidambaram_IN) October 6, 2020
“Naturally, the responsibility to find the resources also falls on the center. It is unfair and unfair to ask the states to borrow the money. The states must stand firm at the next meeting on October 12,” he added.
It is unfair to borrow money from state governments. States must stand firm at the next meeting on October 12
– P. Chidambaram (@PChidambaram_IN) October 6, 2020
Late Monday night, after a marathon meeting of the 42nd GST Council, Finance Minister Nirmala Sitharaman said that no consensus had been reached on the mode of repayment of the full compensation owed: around Rs 97,000 crore (rising to Rs 2.35 lakh crore including Covid-related relief).
The decision on this matter was deferred until the next meeting on October 12. However, the council released Rs 20 billion as compensation for GST owed for this year.
At yesterday’s meeting, held by video conference due to the pandemic, around 10 states once again rejected the center’s suggestion to borrow to pay off fees. Twenty-one states (Puducherry was the only state governed by Congress on this list) accepted one of two loan proposals.
Opposing states said their rejection was a matter of law and not a matter of the majority in parliament, a blow to the ruling BJP who has come under fire for imposing bills in parliament with higher numbers.
States that have opposed the borrowing proposal include those ruled by Congress (which has accused the center of sovereign default) and Kerala and Bengal. Several of them previously wrote to Prime Minister Narendra Modi on this issue, reminding him of “constitutional responsibilities”.
At a previous meeting, the Council had said that states could borrow money in lieu of compensation due, either Rs 97,000 crore or the total Rs 2.35 lakh crore. State governments critical of this proposal said repaying these loans would only add stress to already fragile economies.
Ahead of Monday’s meeting, Chidambaram tweeted: “States must stand firm on rejecting the two pointless options … and insist that the center find the money and pay the promised compensation.”
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