Even BJP-ruled states like Karnataka suggest central govt should
borrow to compensate states.
Following a
five-hour-long GST
Council meeting on Thursday, states accused the Centre of ‘arm-twisting’
them to borrow, terming it a ‘betrayal of federalism’.
Despite being given seven days to examine the two options offered by the
Centre, they turned those down minutes after the meeting concluded. Most states
pressed for borrowing by the Centre to compensate them for the shortfall in
collections.
During the
meeting, the Centre gave the states the option to either borrow Rs 97,000 crore
(shortfall according to the formula given under the law), or the entire Rs 2.35
trillion that accounts for the excess shortage in view of the Covid disruption.
T S Singh Deo,
finance minister of Chhattisgarh, said states were being arm-twisted to get the
compensation, which was Constitutionally guaranteed to them. He questioned why
the Centre wasn’t taking the loan, given there would be no repayment burden on
states and the entire principle plus interest would be repaid through cess
collection anyway.
“They are saying
the entire principle and interest will be repaid using cess, which will
continue after the five-year timeline. They agreed to raise our FRBM (fiscal
responsibility and budget management) limit. If there is no financial burden,
why can’t the Centre take the loan itself, instead of asking states and UTs to
take it separately?” said Deo.
Manish Sisodia, FM
of Delhi, called the offer a ‘betrayal of federalism’. He said the option to
avail of a loan from the RBI
will not work for Delhi because it does not have the right to take a loan, as
it is not a full state.
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