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GST Council Meet | No consensus on compensation dues; Centre to facilitate borrowing for willing states: FM Sitharaman

Increased borrowing costs is not something that the government can afford at a time when India is looking at more money to invest and to borrow to do business, says Finance Minister Nirmala Sitharaman.

October 13, 2020 / 10:36 AM IST

As the Goods and Services Tax (GST) Council could not reach a consensus on borrowing options in lieu of compensation cess shortfall, Finance Minister Nirmala Sitharaman said that some states questioned whether the Council has any authority to disallow those states that have already opted for one of the borrowing options from going ahead with their borrowing plans.

"There was no consensus arrived on a matter on which differences exist. The GST Council can certainly take a call on cess, collection of cess, extending the period of collecting the cess and so on. That was repeatedly reiterated," Sitharaman said.

The minister said that among members there was a question on whether the GST Council can order that either the Centre borrow or states borrow.  "Every state has a business to do what it wants about its own borrowing. GST Council has been gracious enough in unanimously agreeing to extend cess beyond 5 years," Sitharaman said.

Speaking at a media briefing after the GST Council Meeting on October 12, Sitharaman also said that since Article 293 of the Constitution gave states the freedom to borrow, the 21 states that have agreed to avail the option of the Rs 1.1 lakh crore borrowing window, can go ahead and do so.