GST council can vote on borrowing options: Amit Mitra

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October 10, 2020 1:00 AM

“Written text on the proposal says that a special window would be provided for borrowing but expenditure secretary has said that only a letter of comfort could be worked out. Who are we to believe?,” Mitra added.

The earlier meeting on October 5 ended in a stalemate after at least 10 states continued to insist that Centre ought to borrow and compensate states for the revenue shortfall below the guaranteed level of 14% growth year-on-year.

West Bengal finance minister Amit Mitra refuted the argument that GST Council lacked the authority to vote on the issue of borrowing as the loan options were conveyed to the states by the GST Council secretariat. He was speaking to a TV channel ahead of the Council meeting on Monday.

The earlier meeting on October 5 ended in a stalemate after at least 10 states continued to insist that Centre ought to borrow and compensate states for the revenue shortfall below the guaranteed level of 14% growth year-on-year.

Mitra said that the Council will have to find a way to reach consensus but he didn’t explicitly rule out voting. He also said that the central government was consistently shifting the goalpost on the special window to be provided for states if they choose to borrow under ‘option 1’ of the proposal.

“Written text on the proposal says that a special window would be provided for borrowing but expenditure secretary has said that only a letter of comfort could be worked out. Who are we to believe?,” Mitra added.

Sources in the central government have said that the Council has no jurisdiction over an individual state’s choice to borrow to bridge GST revenue shortfall as per the central government’s proposal, which makes voting or division on the issue untenable.They have argued that the states entitlement to borrow is granted under section 293 of the constitution, and any decision on this right is beyond GST Council’s ambit. The willing states can start the process of borrowing if consensus remains elusive in the next Council meeting on October 12.

At least 21 states are in favour of ‘option 1’ of the borrowing plan and states namely Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, West Bengal and Chhatisgarh are not on board with the proposal.

The original ‘option 1’ of borrowing amount of Rs 97,000 crore was revised to Rs 1.1 lakh crore after the basis of calculating states’ shortfall was changed.

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