Kerala and eight other States will jointly approach the Supreme Court if the Centre goes ahead and allow States to borrow up to ₹1.1 lakh crore from a special window facilitated by the Reserve Bank of India as mooted by Centre for paying out this year’s compensation on account of the implementation of the Goods and Services Tax (GST).
Responding to the GST Council’s failure to reach a consensus over the issue of how States will be compensated for their revenue shortfall, Finance Minister T.M. Thomas Isaac said the Centre was stubborn on its stance and the council meeting held online dispersed without taking a decision.
The States were told that they can borrow ₹1.1 lakh crore loan of the ₹2.3 lakh crore GST compensation this year. At least ₹50,000 crore will be received from the compensation cess this year and the balance later. Dr. Isaac said nine of the 10 States that had been opposing the two options mooted by Centre for GST compensation were against this move. “Maharashtra seems to have switched sides as their Finance Minister did not turn up,” he said.
The Finance Minister said the Centre availing itself of the loan to disburse GST compensation was practical and easy and Kerala strongly argued that the disbursal of the GST compensation could not be postponed. “Why cannot the Centre that agreed to increase the loan to be borrowed from ₹97,000 crore to ₹1.1 lakh crore enhance it further. What prevents them?” he asked.
If the Centre did not want voting, Dr. Isaac said they could constitute a subcommittee of State Finance Ministers and decide. The States that stood with Kerala were ready to discuss the new options of the subcommittee and reach a decision.
But, Dr. Isaac said the Centre did not agree to these suggestions and the Union Finance Minister Nirmala Sitharaman was for arriving at a consensus. West Bengal and Chhattisgarh strongly opposed the Centre’s move while Assam and Goa wanted permission to avail themselves of the loan without the GST Council taking a decision.
