Maharashtra CM Uddhav Thackeray (File photo)
Maharashtra CM Uddhav Thackeray (File photo)
Photo: Uddhav Thackeray Official Page/Facebook

Mumbai: For a change, the Shiv Sena-led Maha Vikas Aghadi government has decided not to join the naysayers, read non-BJP ruled states, to oppose the two options offered by the Centre for GST relief. This is despite its having major issues with the BJP-led government at the Centre for the latter's non-payment of adequate assistance to tackle the Covid-19 crisis and shifting key ventures to Gujarat.

A senior MVA Minister told The Free Press Journal, "The state government has decided to accept Option 1, wherein the entire principal and interest will be paid out of the compensation cess on cars, soft drinks, pan masala, tobacco and coal, which will be extended beyond the current deadline of June 2022. States that opt for this will get loans at a specially arranged rate and the debt will not be added to their balance sheet, giving them room to borrow more in the coming years."’ He informed that the state government will send a formal letter to the Centre on Tuesday, conveying its decision to zero in on Option 1.

Under this option, states could borrow Rs 97,000 crore from a special window facilitated by the government, the minister said. The interest burden and repayment would be borne out of cess collection and the borrowing from the special window would not be treated as a debt of the state.

‘‘There is likely to be a GST shortfall of Rs 40,000 crore in 2020-21. Under Option 1, the state government can get Rs 16,000 crore, while it will have to borrow another Rs 30,000 crore from different sources. The state government has taken a non-partisan approach, based on technical and professional considerations,’’ he noted.

According to the minister, the Centre should pay a part of the Rs 30,000 crore from the GST Compensation Cess. At the recently held GST Council meeting, Maharashtra Deputy Chief Minister Ajit Pawar, who holds the finance and planning department, had suggested that the Centre raise debt at low interest rates and clear all dues to states on a priority basis. As far as Maharashtra is concerned, Pawar had urged the Centre to clear arrears worth Rs 22,534 crore as of July. He had warned that further delays would cause the dues to soar to a record Rs 1 lakh crore in two years.

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Free Press Journal