Consensus eludes GST Council

 Consensus eludes GST Council

States Can Borrow To Meet Shortfall

TIMES NEWS NETWORK

New Delhi:13.10.2020

For the first time, the GST Council failed to arrive at a consensus due to sharp division along political lines, allowing the Centre to let 20-odd states issue bonds to raise funds and meet the shortfall in collection.

Continuing from where they left, the 10 opposition-governed states and UTs pressed for the Centre to borrow the funds, something that finance minister Nirmala Sitharaman refused to do, arguing that higher-than-announced borrowings will increase the cost of funds for the government and the private sector.

“The impact will be less if states borrow… The Centre will facilitate borrowings to ensure cost is equitable for all states,” she said after the meeting, sticking to the stand taken even before the borrowing calendar for the second half of the year had been finalised.

At Monday’s four-hour meeting, the third on the issue, there were 12 states that supported the Centre’s preferred option to raise Rs 1.1 lakh crore, out of the Rs 2.3 lakh crore, estimated shortfall from the market. “Whoever wants to talk, please talk. As many states also said, further talking, holding other states will only make them appear very poorly back home… they can’t go back to repeatedly say ‘sorry the Council could not arrive at a consensus so till then I’m not doing any expenditure’… Does our conscience allow us to hold back states which have opted for something till the time a consensus is arrived at?” Sitharaman said.

Some of the states such as West Bengal had proposed that the dispute resolution mechanism be invoked to decide on the issue within seven to 10 days. Alternatively, a group of ministers could be set up, others suggested. But the proposals were rejected with some of the states describing the meeting as a show of “majoritarianism”.

“There is no dispute, we can have differences,” the minister said, adding the GST Council had the powers to decide on issues such as an extension of the compensation cess beyond June 2022, which had been done. She said states have been assured that they don’t have to bear the burden from their budget. The opposition-ruled states have, however, not decided their future course of action.

Full report on www.toi.in

Cong mocks FM’s announcements

Congress lashed out at Union finance minister Nirmala Sitharaman’s announcements to “stimulate demand”, mocking that “government had only told its employees how to spend their money” without injecting anything extra in the economy that is required to check the steep slump. AICC economists Gourav Vallabh and Praveen Chakravarty said that the provisions about the LTC spelt out by the Centre amounted to nothing while the new announcement on capital expenditure by states was too little to change anything. “These are only meant to manage the headlines with the belief that the economy will respond to the headlines,” the AICC said. TNN