Delhi Finance Minister Manish Sisodia accused the Centre of "betraying" federalism by “refusing” to pay GST compensation to states, and demanded it take loan from the RBI on behalf of the city government which he said is facing a revenue shortfall.
Emerging out of a GST Council meeting, he said the Centre has refused to pay GST compensation to states and asked them to take a loan from the RBI to meet their shortfall caused by the COVID-19 pandemic.
“However, under the current hybrid system (of governance), the Delhi government cannot take a loan from the RBI. The Centre should take a loan from the RBI on behalf of the Delhi government," he said.
Sisodia, also Delhi's Deputy Chief Minister, said the city government estimates a revenue shortfall of around Rs 21,000 crore in the current financial year.
The Central government's refusal to pay GST compensation to states is the "biggest betrayal" in the history of federalism in India, he said. Sisodia also charged the Centre with failing to fulfil its promise made to states at the time of launch of the Goods and Services Tax (GST) regime four years ago.
"The Centre had promised that it will pay GST compensation to states at the rate of 14 percent for five years in case of revenue shortfall. But, today at the GST Council meeting, the Centre refused it, saying there was no provision in law for compensation in situations like a pandemic," Sisodia said in a briefing.
He accused the Centre of "double standards".
“In the first two years when the Central government earned extra cess of Rs 47,000 crore, which was supposed to be given as compensation, they kept it in their fund. Today, when the revenue is decreasing, they started taking opinion of the Attorney General on whether they are liable to give this amount to states or not,” he said.
Sisodia also alleged that the Centre has "failed" to properly implement the GST which was why it could not neither control price rise nor boost revenue of the states.
"I am not against GST, but the central government has failed to implement it properly. Had they implemented it properly, the states would not have to beg like this. First, the Centre failed in implementing GST reforms properly, and now they are betraying states and running away from its responsibility of giving GST compensation," he said.
The Delhi government collected Rs 7,000 crore less tax in the first four months of the fiscal. It will have a shortfall of Rs 21000 in the whole year.
"The central government should take a loan on our behalf as we also need to pay salaries to our doctors, teachers, engineers and other employees,” he said.
If there were no GST, the states would have managed taxes and expenses in their own way. But after joining the GST regime, they had to surrender most of their rights to the GST council, he said.
Sisodia claimed that many states, including some BJP-ruled ones, demanded compensation from the Center in the meeting.They quoted the minutes of previous meetings of the GST Council where it was "clearly stated" that the Central government "takes full responsibility" to compensate them in case of revenue shortfall, he added.