Chhattisgarh Chief Minister Bhupesh Baghel has demanded Rs 2,828 crore from the Centre as Goods and Services Tax compensation, ANI reported on Tuesday.
Baghel asked the Centre to take a loan to pay GST compensation to states, PTI reported. “You are well aware that as per constitutional provisions, the Centre is accountable for providing GST compensation,” Baghel said in a letter to Union Minister of Finance Nirmala Sitharaman. “If states borrow loans for the purpose, then the financial burden would fall on the states. Receiving the cess for GST compensation by the Centre and repaying loan by the state through it will be a complex and uncertain process.”
Therefore, Baghel suggested, the Centre should provide compensation by taking the loan itself, or using some other resources to pay GST compensation. Baghel said Chhattisgarh’s due amount of Rs 2,828 crore has been outstanding for five months, and should be paid without any delay.
On August 29, the Union Ministry of Finance put forth two options before states to meet the shortfall of of Rs 2.35 lakh crore in GST compensation for 2020-’21. The first option is that the states may borrow the full compensation deficit of Rs 2.35 lakh crore via a special window in consultation with the RBI. The second option entailed borrowing the entire projected shortfall of Rs 2.35 lakh crore this year, facilitated by the central bank.
However, the Kerala government rejected both options on August 30. Like Chhattisgarh, Kerala asked the Centre to take a loan and clear the dues. “Kerala wants the Centre to take loan and provide GST compensation and this has the approval of the Chief Minister Pinarayi Vijayan and other ministers,” state Finance Minister Thomas Isaac said.
The Centre’s revenues have been badly hit over the last five months due to the impact of a lockdown imposed to control the spread of the coronavirus.