GST Council meeting ends, no consensus on states' compensation: Fin Min
New Delhi: A meeting of the Goods and Services Tax (GST) Council on Monday once again ended without any conclusion and the deadlock on compensation to states for the shortfall in their share of the indirect tax revenue continues, Union finance minister Nirmala Sitharaman said.
Nirmala Sitharaman's comments came after another marathon meeting of the GST Council as she said there is no dispute but "we may have differences over states' compensation". "We were not able to arrive at a consensus. I appealed to all the states... That is how the GST Council meeting ended today," Sitharaman said during a press conference.
Sitharaman, who heads the Council, said the Centre cannot borrow and pay states for the shortfall as it would lead to rise in bond yields, resulting in a rise in borrowing costs for the government and the private sector. However, this would not be the case if states borrowed against future GST receipts, she said, adding 21 states had agreed to borrow as suggested by the Centre. However, other states insisted on a decision to be taken by consensus, she said.
"The collection of cess is inadequate for paying compensation. This is absolutely apparent for everyone to see and because it is something which was never envisaged, the shortfall will now be met by borrowing," she said.
"The Centre has issued a borrowing calendar, if I go beyond that to borrow, the G-Sec deals which are used as a benchmark for every other borrowing will go up, this will hence increase borrowing costs for states and private sector too," she said.
The Union Finance minister said that 12 states had accepted the Centre's repayment proposal to borrow from the markets on their own account and that nine others stood wanting the Centre to do the borrowing. Sitharaman said she has asked for time to consider the demands of these nine states.
"We are open to anyone who wants us to facilitate any loan. A lot of people have chosen Option 1, and some will approach us tomorrow morning. We are ready to deal with it," she said.
