PUDUCHERRY: Puducherry Chief Minister V Narayanasamy has written to Prime Minister Narendra Modi asking the Centre to borrow from the market or RBI and subsequently compensate states and union territories for losses in revenue due to GST implementation.
The letter rejected Central government's recommendation asking states to borrow funds in bid to make up for the losses.
Narayanasamy wrote that it is the 'primary responsibility' of the Central Government to pay the GST compensation to states, for loss of revenue, as promised by the former Union Finance Minister Arun Jaitley.
Passing the burden on the states to borrow from the market, will affect the FRBM and also the fiscal deficits of the state governments, the Chief Minister's letter read.
There are many advantages for the Government of India (GOI) borrows money to compensates the states such as lending from the market on the basis of public sector bonds, less interest, among other perks, V Narayanaswamy's letter stated.