Centre cornering us to borrow from RBI, says Delhi govt official

New delhi: The Centre and Opposition-ruled states met virtually for the GST Council meeting to debate on the goods and services tax (GST) compensation for state governments for the Financial Year 2021 with Delhi being forced to accept the Centre's suggestion that it should borrow Rs 6,000 crore from the Centre and return it through the cess generated after 2022 with interest, a senior Delhi government official aware of developments said.

In the face-off between Centre and the 10-non BJP ruled states who opposed its options, Delhi along with 21 other states have been compelled to take option one –– borrow from the Centre and return the money through the cess collected after 2022.

"We were hoping that the Centre would have a large heart and give us other options but they have betrayed us. Delhi being a Union Territory was presented with option one only and we have been forced to take it," a senior Delhi government official who attended the meeting told Millennium Post.

Kerala, West Bengal and Punjab have rejected the Finance Ministry's proposal for states to fully borrow in order to meet the GST revenue shortfall and have instead demanded setting up of a dispute settlement mechanism. The Constitution does not specify any dispute resolution mechanism and deciding on the framework has been left to the GST Council. Delhi along with Kerala, West Bengal and Punjab wanted the Centre to fully borrow the GST revenue shortfall amount and compensate states.

In the meeting which concluded late on Monday, the Finance ministry urged states to reach a consensus on their own but if they cannot then the Central government would have to make the decision for them and clarified that "central government borrowing is not possible and that states will have to borrow on their own," the official said. The meeting ended abruptly with the Centre telling opposing states to "accommodate and take

option one."