GST Council forcing states to borrow: Congress governments

Puducherry Chief Minister V Narayana Samy, Punjab Finance Minister Manpreet Singh Badal and Chhattisgarh health minister TS Singh Deo addressed an AICC briefing post-GST Council meeting to air their grievances.

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NEW DELHI: The GST Council has imposed borrowing on states, Congress-ruled states have said. Addressing a news conference after the GST Council meeting on Thursday, representatives of Congress states alleged that the council did away with “consensus-based decision-making” and imposed “majoritarian views” by “steamrolling” other views. The government ignored deepening financial hardships of states following Covid-19 and lockdown and have exploited the revenue bonanza from low crude oil prices, they alleged.

Puducherry Chief Minister V Narayana Samy, Punjab Finance Minister Manpreet Singh Badal and Chhattisgarh health minister TS Singh Deo addressed an AICC briefing post-GST Council meeting to air their grievances.

Narayanaswamy said even BJP’s finance ministers of Karnataka and Bihar pushed for a more considered stand towards compensating states of their GST dues. Pointing out the assurance given by the then FM Arun Jaitlely that the Centre was duty bound to pay states if there is shortfall in compensation cess, Narayana Samy said, “but at today’s meeting, we saw the FM of Karnataka candidly telling the Centre to borrow and give it to the states. The Deputy CM of Bihar asked the Centre to either facilitate borrowing for states or allow them to borrow at a low interest rate and increased FRBM limit. The Centre is worried about maintaining a low fiscal deficit and FRBM limit rate, but applies no such worry about similar concerns of states.”


Badal said, “a decision has been imposed on us. Our stand was the Centre should pay one third of deficit out of its consolidated fund and the next two-third the states can borrow, in the sixth or seventh year. We can’t forget the fact the cess due to compensation ultimately needs to substitute in the revenues of the states and the Centre jointly post-2022. So, the solution that is given today is not satisfactory. We had no choice as this was the only solution placed on the table. We have asked for one week for our cabinet to look into it.”

Singh Deo said, “compared to 2014, when the BJP government assumed office at the Centre, the excise duty on diesel has gone up 9 times and on petrol 3.5 times now. This additional revenue is being fully exploited by the Centre while showing no concerns in protecting financial interests of the states. Earlier the decisions of GST council meeting used to be based on complete consensus but now it has become majoritarian decision-making by steamrolling other views”.
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