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GST Council meet: NDA-ruled states welcome centre’s borrowing plan

NEW DELHI/BENGALURU/HYDERABAD/GUWAHATI: The NDA-ruled states have welcomed the borrowing options proposed by the Centre to make up for the shortfall in the goods and services tax (GST) compensation cess fund. However, these states are yet to take a final call on the option.

“When the central government is saying that it will be paid from the GST compensation cess fund and there wouldn’t be any burden on the exchequer or state finances, what is there to criticise. Congress-ruled states are criticising just for the sake of it,” Bihar finance minister and BJP leader Sushil Kumar Modi told ET. He added the procedure was laid down by the then finance minister Arun Jaitley and was accepted by all in the eighth GST Council meeting.

Similar views were echoed by Madhya Pradesh finance minister Jagdish Devda. “I thank the Union finance minister for suggesting a mechanism to provide GST compensation to states. Now, states will not be deprived of funds due to Covid.”

UP’s senior government officials said they were still waiting for the GST Council’s written proposal. State finance minister Suresh Khanna said: “The Centre’s proposal will help states overcome the stress caused by the pandemic.”

Karnataka will decide only after receiving the Centre’s proposal. Manipur finance minister Yumnam Joykumar Singh said the state doesn’t have much pending dues. Tripura’s deputy CM Jishnu Dev Varma also welcomed the GST Council’s proposal.

Finance minister Rameshwar Oraon of opposition-ruled Jharkhand told ET: “If Centre will bear the burden, then we are ok with it… However, this is just an oral assurance. We need it in writing and are waiting for the central government to send the proposal.”

Southern states like Andhra Pradesh, Telangana and Tamil Nadu are also waiting for the Centre’s proposal in writing.

“Most of the states were of the opinion that the cess fund is running short of money. So, it could be extended beyond five years with the council’s approval, and while the government does the borrowing and lends to the fund, states can repay with cess collections,” said a Tamil Nadu government official.

Telangana government officials told ET that the Centre, instead of hiding behind legal recourse and beating states with a stick, could have been honest with realities.

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