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Budget 2021

Associate Partners:

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GST Council meet: Centre is betraying states, says Delhi Finance Minister Manish Sisodia

The Centre has given two options for borrowing by states to meet an estimated GST compensation shortfall of Rs 2.35 lakh crore this year due to the pandemic.

August 27, 2020 / 10:27 PM IST

Delhi Finance Minister Manish Sisodia has accused the Centre of betraying the states by running away from its responsibility and asking state governments to borrow money to compensate for the revenue shortfall.

“First the Centre asked us to merge with GST and now when we need money they want us to take loans from the Reserve Bank of India (RBI).  This is the biggest betrayal that the Centre has done to states in a federal structure,” Sisodia said on August 27 at a press conference after the five-hour-long marathon meeting of the GST Council on August 27, chaired by Union Finance Minister Nirmala Sitharaman.

The Centre gave two options for borrowing by states to meet an estimated GST compensation shortfall of Rs 2.35 lakh crore this year due to the pandemic.

“Borrowing loan is even more difficult for us because we are not a full state. This shows the double standards of the Centre,” Sisodia said, asserting that the Delhi government will reject the Centre's proposals.

In the first option offered by the Centre, a special window can be provided to the states, in consultation with the RBI, at a reasonable interest rate for borrowing Rs 97,000 crore. The amount can be repaid after five years of GST implementation in 2022 from cess collection. The second option before the states is to borrow the entire Rs 2.35 lakh crore shortfall under the special window. The states have seven days to take a decision.

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“Delhi’s revenue collection is 57 percent less than the target. Either the government should compensate us or borrow a loan for us. We also need to pay our employees, doctors, teachers…We had a revenue shortfall of Rs 60,000 crore in the last four months. For the whole year, the shortfall is Rs 21,000 crore. How will we pay salaries and fund local bodies under these circumstances,” Sisodia said

Sisodia, who is also Delhi’s Deputy CM, said he was in favour of GST but the Centre had failed to implement it properly.

“When the cess collection was more than needed, the Centre transferred Rs 47,000 crore to the Consolidated Fund of India. But now when funds are falling short, the Centre is asking states to borrow and seeking AG’s opinion,” he said.

Earlier, finance ministers of Punjab and Chhattisgarh had accused the Centre of thrusting decisions on them.
Gulam Jeelani
first published: Aug 27, 2020 07:43 pm
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