THIRUVANANTHAPURAM: Kerala will not accept both the options put forward by the Central government to bridge the GST shortfall. In its feedback, the state will demand that the Central government should borrow funds on its own and hand over the eligible amount to the states in full.
Chief Minister Pinarayi Vijayan asked the Centre not to impose the borrowing liability on the states. He listed three reasons for this. "One, when the states borrow, they will have to pay 1.5 per cent to 2 per cent more interest as compared to the Centre. Second, there is uncertainty over raising the borrowing limit. If the limit is not upped in full consideration of the compensation amount, it will eat into the normally eligible borrowing sanction for the state," he said.
The third reason is that the compensation would differ among states and hence the borrowing limit for each state would be different. The CM said the classification of the shortfall as that "due to the GST implementation" and "COVID-19-led shortfall" is illegal and unconstitutional.
Finance Minister TM Thomas Isaac said he has convened a meeting of finance ministers of states which share Kerala’s view. The meeting on Monday afternoon is to evolve a consensus on the feedback to be submitted within seven days. "Each state will submit its own memorandum but we are trying for a common approach and shared opinion," he said.
Isaac said he expects the finance ministers of certain BJP states also to attend the meeting since they too had raised similar demands at the council meeting. Isaac said the Centre was worsening an issue which could have been settled amicably.
He said that the BJP government is challenging states whenever it gets an opportunity. The CPM state secretariat has called for a public protest against the Centre’s stand on the issue.
"The state is facing a big financial crisis due to the flood, other natural disasters and Covid-19 pandemic. If the Union government does not provide the eligible tax share to the states, it will derail the Covid-19 control activities, salary, pension and other expenses," it said in a statement.