Opposition ruled states likely to take a stand against Cenre's GST shortfall settlement plans

NEW DELHI: The opposition-ruled states are likely to take a common stand on Goods and Services Tax (GST) shortfall compensation following the Centre’s decision to borrow through a special window and provide back-to-back loans to the states.
Congress top leadership will reach out to opposition-ruled states of West Bengal, Kerala and Jharkhand to take a common stance on the finance ministry’s decision to borrow Rs 1.1 lakh crore and loan it to the states in lieu of GST compensation. If the states agree to take a common stance, Congress president Sonia Gandhi is likely to call a meeting of chief ministers of Kerala, West Bengal, Jharkhand, Telangana and Congress-ruled states of Chhattisgarh, Rajasthan and Punjab to decide on the strategy.

Aam Aadmi Party-ruled Delhi has agreed to the Centre’s new proposal. Delhi finance minister and deputy chief minister Manish Sisodia confirmed to ET that Delhi has agreed to the Centre’s decision to borrow for the states through a special window. Earlier, the opposition unity was tested when Maharashtra, which has a coalition government of Shiv Sena and Congress, had “unwillingly” agreed to one of the options proposed by the Centre.

With Delhi and Maharashtra agreeing to the new proposal, it will now be down to seven opposition-ruled states.

“We are of the view that since the states have fought this together, a common stand should be taken,” Chhattisgarh commercial tax (GST) minister T S Singhdeo told ET. “We have discussed it with party leadership and left it to the high command to take a final call. The leadership is in touch with other states.”

Singhdeo, however, said that even though the Centre has offered to borrow for the states, there are certain issues that need to be finalised. “The Centre has offered to borrow Rs 1,10,802 crore to compensate for GST shortfall. Out of this amount, Chhattisgarh will get Rs 3,000 crore. Our shortfall till September is Rs 4,000 crore. Let us say, if this part is covered, what happens over the next six months? Revenues would certainly increase and shortfall will be lesser. But still there is no clarity who would provide for this shortfall,” Singhdeo said, adding that once the Centre had agreed to borrow, it should have not allowed the issue to linger on.

Kerala, which had led the opposition-ruled states in the fight for GST shortfall compensation, has also welcomed the Centre’s move but not accepted it yet. The political controversy had been triggered by a GST revenue shortfall of Rs 2.35 lakh crore for the states. As per the GST Act, the Centre has to compensate for any GST losses. The Centre, however, gave the states two options to borrow Rs 97,000 crore from a special window facilitated by RBI or Rs 2.35 crore from the market to make good the compensation shortfall.