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GST Council meeting starts, spotlight on compensation to states
Union finance minister Nirmala Sitharaman is chairing the 42nd Goods and Services Tax (GST) Council meeting virually in Delhi. The GST Council last met on August 27 and had presented two options to the states regarding GST compensation.
The Goods and Services Tax (GST) Council meeting, chaired by Union finance minister Nirmala Sitharaman, got underway on Monday in Delhi. Apart from Nirmala Sitharaman, Union minister of state (MoS) for finance Anurag Thakur and finance ministers of states and Union territories (UTs) are also attending the virtual meeting, which is being held to finalise modalities to compensate states for their revenue shortfall of ₹2.35 lakh crore in the current financial year.
The GST Council last met on August 27 and had presented two options to the states regarding GST compensation. It included a special window in consultation with the Reserve Bank of India (RBI) to provide ₹97,000 crore at a reasonable interest rate. It had also said that the entire GST compensation gap of ₹2,35,000 crores this year can be met by them in consultation with the central bank.
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Opposition-ruled states of Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana and West Bengal have not yet opted either of the two borrowing options. Officials familiar with the developments have said that 21 states have opted to borrow ₹97,000 crore so far to plug a shortfall in revenue from GST rather than borrow the entire deficit of ₹2.35 lakh crore.
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The Centre has projected a Rs. 2.35 lakh crore shortfall in GST revenue, ₹97,000 crore accruing from implementation issues and the rest from the pandemic, and prompted the states to borrow from the market to cover the deficit.
So far, Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tripura, Uttarakhand and Uttar Pradesh have opted for the first borrowing option.
