BENGALURU: The Congress is prepping to launch a full frontal attack against the Union government at the next GST Council meet, accusing it of violating the GST Compensation to States Act by refusing to pay compensation, and forcing them to borrow more.
Punjab Finance Minister Manpreet Singh Badal, former GST Council member Krishna Byregowda and former Rajya Sabha MP Rajeev Gowda held a virtual press conference, saying the Modi government is pushing states – already battling a pandemic – into further debt.
“We have a GST Compensation Act that mandates the Centre to pay compensation to States for five years at the rate of 14% growth of GST revenues. In the good years, when GST compensation revenues were higher than what was due to States, the Centre absorbed Rs 88,000 crore but now when times are tough, the Centre should compensate states,” said Prof Rajeev Gowda.
The Congress demanded that the Centre pay GST compensation in full. Instead of increasing borrowing limit of states, the Centre should borrow from the market and use that to compensate states. It asked for GST compensation cess period to be increased to 10 years, holding the Centre responsible for the financial crisis.
“Pendency in compensation is not just a post-Covid situation. The issue existed for a year and the Centre didn’t try to solve it. It is another sign of the Centre abdicating its constitutional responsibility and refusing to assist states,” said Byregowda. He pointed to an SBI report stating that only eight states are eligible to borrow more, which means others will be left in the lurch. “Karnataka is looking at floods and crop damage. If states don’t get their share, it will limit their ability to respond to these issues,” he added.