NEW DELHI: Delhi Chief Minister Arvind Kejriwal on Tuesday wrote to Prime Minister Narendra Modi, urging him to consider more legally viable and sustainable options for providing GST dues to states to help them tide over the Covid-19 financial crisis.
The two options of borrowing presented by Ministry of Finance, which primarily require the states to borrow and then meet repayment liabilities will put an extremely ‘onerous burden’ on states, he said.
According to an official statement, the chief minister said the GST Council should consider authorising the Centre to borrow on its behalf and extend the period of collection of cess beyond 2022.
Terming the GST reform as a landmark reform in the indirect tax structure of India, Kejriwal in the letter said the assurance of compensation to states to meet the shortfall in collections is one of the pillars on which the entire GST edifice rests. He also said that all states will overcome the unprecedented situation that the Covid-19 pandemic has brought before the country by working collectively.
“The two options of borrowing presented by the Ministry of Finance, Government of India which primarily require the states to borrow and then meet repayment liabilities will put an extremely onerous burden on States which are, as it is, reeling under financial crisis due to shortfall in revenue collections and an increased commitment of expenditure emerging from Covid-19 response,” Kejriwal said.
“To create an artificial distinction between loss occurring due to implementation of GST and those occurring due to pandemic goes against the very spirit of the Compensation Act and will lead to a creation of a trust deficit between the Centre and the states,” he also said.
States asked to borrow
The Centre and non BJP-ruled states are at loggerheads over the financing of the I2.35 lakh crore GST shortfall in the current fiscal. Last week it gave two options to states to borrow either from the RBI or from the market.