NEW DELHI: The government claims that eighteen states have agreed to go ahead with the option to use special dispensation from the Reserve Bank of India (RBI), for a sum of about Rs 97,000 crore shortfall, and it is planning to go ahead with voting in the next GST council meet.
Sources in the finance ministry say that 18 states have agreed to go ahead with the first option so far and they will wait for another week to get response from the rest.“So far 18 states and all Union Terrotories have agreed for the first option. Only few states are resisting, only for political reasons. The centre will wait till this week for the rest and then in the next GST council meeting will go for a voting if required,” said a senior finance ministry official.
The next GST council meeting is likely to be on October 4.The states which have not given any response include Tamil Nadu, Kerala, West Bengal, Delhi, Chhatisgarh, Jharkhand among others. In the GST council meet held on August 27, the finance secretary said that this year the GST shortfall is estimated at Rs 3 lakh crore, out of which Rs 97,000 crore is due to the GST implementation, while rest is due to Covid-19.
With cess collection expected to be at Rs 65,000 crore, states are staring at gap of Rs 2.35 lakh crore. The Centre gave two option to the states — either opt for borrowing for the full shortfall or for the shortfall only due to GST.
The finance ministry then sent a letter to the finance secretaries of the states and Union Territories, clarifying that the special borrowing window will be made to only those states which opt to fill the shortfall due to the GST and those who go for full borrowing will have to borrow from the open market and have to pay full interest on the borrowing from their own resources.
Besides, the finance ministry has made it clear that both the principal and interest on the borrowed amount will be paid by the Centre from the compensation cess only if states opt for the first option.In the second option, the Centre will only take guarantee of the principal amount and states will have to bear the interest cost, a proposal which was strongly contested by the opposition ruled states.
States that have not responded yet
The states which have not given any response include Tamil Nadu, Kerala, West Bengal, Delhi, Chhattisgarh, Jharkhand among others. The finance secretary said that this year the GST shortfall of states is estimated at Rs 3 lakh crore, of which Rs 97,000 crore is due to GST implementation