Arvind Kejriwal urges center to provide a more viable and sustainable option for providing GST dues to states

In a letter to the Prime Minister Narendra Modi, Delhi Chief Minister Arvind Kejriwal asked the centre to provide a more viable and sustainable option to overcome the economic crisis faced by states during the COVID-19 pandemic.

In a letter to the Prime Minister Narendra Modi, Delhi Chief Minister Arvind Kejriwal asked the centre to provide a more viable and sustainable option to overcome the economic crisis faced by states during the COVID-19 pandemic. Following a deliberation on the two options given by the Ministry of Finance, which requires the states to borrow and then meet repayment liabilities, CM Kejriwal urged the GST Council to authorize the Centre to borrow on its behalf and extend the period of collection of cess beyond 2022.

As per the current option presented by the centre, state governments could borrow either via a special window it will facilitate through the Reserve Bank of India (RBI) or raise debt from the market, which Kejriwal put to be an “onerous burden.”

In his letter addressed to the Prime Minister, Kejriwal has said, “It is in the background that I would like to submit that the two options of borrowing presented by the Ministry of Finance, Government of India which primarily require the States to borrow and then meet the repayment liabilities will put an extremely onerous burden on the States which are, as it is, reeling under the financial crisis due to the shortfall in the revenue collections and an increased commitment of expenditure emerging from COVID-19 response.”

“The Goods and Services Tax (Compensation to States) Act, 2017, very clearly provides for compensation to the States for the loss of revenue arising on account of the implementation of the GST in pursuance of the provision of the Constitution (101st Amendment Act, 2016). To create an artificial distinction between loss occurring due to the implementation of the GST and those occurring due to COVID-19 pandemic goes against the very spirit of the Compensation Act and will lead to a creation of a trust deficit between the Centre and the States, wherein in future, the States will be hesitant in coming together to achieve more such larger common national goals, as was done through the implementation of GST,” he added.
Kejriwal also mentioned that the situation created by these unprecedented times can be overcome by working collectively

 

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