New Delhi: No consensus has been arrived at to break the deadlock regarding GST compensation as only 12 states have agreed to the Centre’s solution for revenue losses after the marathon meeting of the Goods and Tax Services (GST) Council on Monday. Finance Minister Nirmala Sitharaman has sought time to consider the demands of nine others. Also Read - Be Ready to Face 'Twindemic' as Winter is Approaching Amid COVID-19 Pandemic: Experts
“The collection of cess is inadequate for paying compensation. This is absolutely apparent for everyone to see and because it is something which was never envisaged, the shortfall will now be met by borrowing. Also Read - Delhi May Report 14,000 Covid Cases a Day During Festive Season: Satyender Jain
“There was no consensus arrived on a matter on which differences exist. The GST Council can certainly take a call on cess, collection of cess, extending the period of collecting the cess and so on. That was repeatedly reiterated,” Sitharaman said addressing the media after the GST Council meet. Also Read - 90% Infected People in India Have Recovered From COVID-19: Health Ministry
“Centre has issued the borrowing calendar. If I go beyond the calendar, it will immediately jack up the bond deals. The G Sec yield will go up and if this went up then the borrowing cost will increase,” she said.
“Among members, there was a question ‘Can the GST Council order that either the centre borrow or states do this?’ because every state has a business to do what it wants about its own borrowing. GST Council has been gracious enough in unanimously agreeing to extend cess beyond 5 years,” she added.
The finance minister affirmed that India cannot afford increased borrowed costs at a time when the country is looking at more money to invest or to borrow for business. “The impact would not be as severe if states were to borrow,” she said.
“States borrowing does not mean a chaotic situation, we will facilitate states so that some states end up paying high-interest rates while others obtain loans at a reasonable rate,” she reiterated.
After the previous GST Council meeting, the Centre had disbursed Rs 20,000 crore compensation cess to states for their losses suffered during the coronavirus-infused lockdown.
The total compensation due to states amounts to about Rs 97,000 crore. It aims to end the impasse between cash-strapped states and Centre over GST that has been going on for months.