Mumbai
Non-BJP states have reminded Finance Minister Nirmala Sitharaman of the decision taken at the 8th meeting of the GST Council chaired by her predecessor, the late Arun Jaitely. The former finance minnister had assured the member states that ‘’compensation to States shall be paid for 5 years in full within the stipulated period of 5 years and, in case the amount in the GST Compensation Fund fell short of the compensation payable in any bimonthly period, the GST Council shall decide the mode of raising additional resources, including borrowing from the market, which could be repaid by collection of cess in the sixth year or further subsequent years.
On Centre’s two options of borrowing from RBI or from Centre and RBI, these states observe they will raise the debt to be compensated for their arrears which is against the GST Council’s unanimous decision arrived at the 8th meeting held on January 3 and 4, 2017.
An officer from the Maharashtra Government, who was present at that meeting, told Free Press Journal, ‘’ Most states had demanded that even if the amount available in the GST Compensation Fund was not sufficient to pay compensation, the States shall be paid compensation within the five-year period and that levy of cess might be extended beyond five years to recover the shortfall.’’ He further said thereafter former FM late Arun Jaitely while summing up the meeting assured that compensation to States shall be paid for 5 years in full within the stipulated period of 5 years and, in case the amount in the GST Compensation Fund fell short of the compensation payable in any bimonthly period, the GST Council shall decide the mode of raising additional resources including borrowing from the market which could be repaid by collection of cess in the sixth year or further subsequent years.
The officer recalled that Maharashtra Deputy Chief Minister Ajit Pawar on behalf of states had urged the Centre to raise debt at low interest rates and provide compensation to the states.
On the other hand, Puducherry Chief Minister V Narayanasamy said majority of the states insist that the Centre should fulfill its statutory commitment and it should not pass burden on states which are reeling from major financial stress.
Punjab Government officer said the state government had made a strong representation pressing for Centre to pay the compensation instead of asking the revenue starved states to borrow. ‘’This looks quite strange wherein the cash strapped states will borrow to compensate themselves,’’ he opined.
