It is welcome that the Centre has decided to borrow Rs 1.1 trillion to lend to the states as debt in lieu of the Goods and Service Tax compensation payment. Earlier it had insisted that the states borrow the funds on their own. The states had vehemently opposed the suggestion. And last week, when the Centre agreed to borrow Rs 1.1 trillion, some of the nay-sayers insisted that the Centre borrow the entire Rs 2.35 trillion this financial year and pass it on to them. This, all indications are, the Centre is unlikely to accept.
At an earlier meeting of the GST Council, the Centre had taken the unprecedented force majeure plea due to the Covid-19 intervention, to argue against paying the promised compensation, offering instead the option for states to access funds directly from the market or forgo the originally committed compensation altogether. Both alternatives were unacceptable to the states, though for obvious reasons, the BJP-ruled states were muted in offering resistance.
However, the decision by the Centre last week to borrow money to lend to the states in lieu of the GST compensation does mark a climb-down and needs to be gracefully accepted by all sides. The obstreperousness of the states, particularly Kerala and Chhattisgarh, and the insistence on an all-or-nothing approach does not sound helpful. The pandemic disruption has played havoc with the finances of both the Centre and the states. To claim that the Centre give what was promised three years ago without appreciating the steep fall in revenues all around due first, to falling growth, and, later, owing to the extended disruption following the pandemic, does not help in locating a mutually negotiated settlement.
Cooperative federalism requires both the states and the Centre to resolve their differences through mutual accommodation, rather than either side adopting a no-compromise position. Now that the Centre has come forward to borrow half the compensation dues, the states should explore the avenues offered to meet the shortfall. Besides, the special compensation cess is now to be extended for a further period beyond 2022. There is no reason for the states to sit on a high horse and complain.
Also, the obstreperous states would be wrong in persisting with resistance in the hope that it will yield rich electoral dividends. It will not. Ordinary people are prone to appreciate the strained resource position all around due to the pandemic. It is worth pointing that the Centre was rather generous in offering compensation in return for the states’ acceptance of the GST. Such generosity need not become an albatross around the Centre’s neck.
Rejected and dejected loose cannons
Whether it is frustration or something else, Opposition leaders are displaying an unacceptable streak of irresponsibility and recklessness. The Congress dynast Rahul Gandhi bragged the other day were he the Prime Minister, he would have thrown the Chinese out in '15 minutes'. Now, without being fully aware of the true numbers of coronavirus deaths and infections in Pakistan, the de facto Congress boss has praised it to the skies for having handled the pandemic better than India. Maybe that is true, maybe not, but relying on official Islamabad numbers is fraught with danger.
Again, former Finance Minister P Chidambaram has said if his party returns to power it would restore Article 370. This may not be constitutionally questionable but has Chidambaram considered whether it will be politically acceptable? Ordinary voters are bound to view the restoration of Article 370 with great suspicion, nay, great disapproval. As it is, the Congress has forfeited the trust of the voters; making such promises is unlikely to endear it to them. But the man who really put his foot, old and unstable, in his mouth was Farooq Abdullah.
Though the Abdullahs have a long tradition of singing a pro-accession tune while in power and being ambivalent when out, this time the former J&K chief minister really outdid himself. Decrying the Modi government for the nullification of Article 370, he virtually invited China to press ahead with its aggression and force the Centre to restore Article 370. Of course, Beijing and Islamabad would approve the cooing call of a discredited Kashmir politician whose family bears a major share of blame for the lack of prosperity, education and healthcare infrastructure in the state despite the trio of Abdullahs having ruled it for the longest possible period since the founding of the Republic. Such treachery even from a Farooq Abdullah came as a surprise.
Meanwhile, China will commit a blunder if it were to take the invite from a rejected and dejected Kashmir leader seriously. He has had no stake in Kashmir’s well-being bar feathering his own nest.