Nirmala Sitharaman has asked for time to consider the demands of these nine states. (Proceedings)
New Delhi:
There is still no consensus to break the deadlock between the central government and those of the states and UT on the mode of payment of the GST compensation, the Union Finance Minister Nirmala Sitharaman said on Monday night after another GST Council meeting, the second in seven days and the third in a row to end with no deal in sight.
By the end of today’s meeting, 12 states had accepted the centre’s payment proposal, to borrow from the markets on their own, but nine others stood firm and insisted that the center, which is obliged to provide compensation GST, make the loan.
In all, 21 states have agreed to take out loans. Sitharaman has asked for time to consider the demands of the nine states that refused to do so after today’s meeting.
The total compensation owed to the states is around 97,000 crore rupees, but rises to 2.35 lakh crore rupees, including financial relief related to Covid.
At today’s meeting, Punjab Finance Minister Manpreet Singh Badal, one of the few opposition finance ministers to insist that the center take responsibility for paying GST dues, said the issue was “simple. “. “Give us compensation according to the law …” he said.
GST compensation has emerged as a sore point with state and union territory governments this year, particularly with the adverse economic impact of the pandemic and the Covid shutdown.
The center is struggling to pay compensation to states, due to a state’s revenue growing more slowly than 14 percent, because states have not gained much this year due to the months of lockdown required by the COVID crisis -19.
Congress called the delay a “sovereign default” and retracted the constitutional guarantees that were the reason the states joined the GST regime. Several opposition-ruled states, including Punjab, Bengal and Kerala, have been equally upset.
Today Mr. Badal said: “We are close to setting dangerous precedents: Goodbye to the Constitution. Goodbye to the compensation law … Goodbye to the opinion of AG aware (referring to the observation of the Attorney General in August that the center was obliged to fully compensate states) “.
Last week, Ms Sitharaman said that although no agreement had been reached, the center would release around Rs 20 billion in compensation for this year.
States opposing the loans, which include Kerala and Bengal, have written to Prime Minister Narendra Modi, reminding him of his government’s “constitutional” responsibilities.
States that oppose borrowing as a method of payment have also noted that this places an additional burden on their finances at an already difficult time. The center, they said, could shoulder this burden and repay the loan by shifting GST tax collection beyond 2022.
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