Deputy Chief Minister Manish Sisodia attended a meeting with the finance ministers of seven non-BJP ruled states which rejected the Centre's suggestion of states borrowing to make up for the GST shortfall. A Delhi government statement said Sisodia, who is also Delhi's finance minister, discussed viable options with the finance ministers regarding the shortfall in the economy due to the COVID-19 outbreak, the statement said.
In the virtual meeting, states resolved that the following is the only legally tenable option during this critical situation --- the entire estimated shortfall of Rs 235,000 crore in the compensation cess fund may be borrowed by the Centre through RBI or any other suitable mechanism, the statement stated.
These states also resolved that the repayment of the principal and the interest liability should start 2022 and should be entirely serviced out of the receipt from the cess for which the GST Council should extend the period of levy of cess beyond five years or till the time it is required to repay the debt, it stated.
The Centre and non BJP-ruled states are at loggerheads over the financing of the Rs 2.35 lakh crore GST shortfall in the current fiscal. Of this, as per Centre's calculation, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is the impact of COVID-19 on states' revenues. The Centre last week gave two options to the states to borrow either from a special window facilitated by the Reserve Bank of India or from the market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022.