Chhattisgarh Chief Minister Bhupesh Baghel in a letter to Finance Minister Nirmala Sitharaman rejected the Centre’s suggestion to take a loan to meet the GST shortfall, and instead said that the Centre should arrange for funds itself and not lay the onus on the States.
The Centre owes ₹2,828 crore for the last four months to Chattisgarh and should pay the dues immediately, he wrote. Mr. Baghel said that the Central government had assured the States in the GST Council in 2017 that any shortage in States’ revenue after implementation of GST would be compensated till 2022. “Hence, under current circumstances, more practical and logical for the Central government would be to take a loan and sanction GST compensation amounts to the States,” he wrote.
The Central government should be directly taking loan to provide the GST compensation amount to the States, instead of advising the States to take loan, Mr. Bhagel said. The Reserve Bank of India provides loan to each State on different interest rates, hence in this situation, it would be more practical if the Central government takes loan and sanctions it to the States, he said.
He also sought to remind the Finance Minister that as per the Constitutional provisions, it was the responsibility of Central government to provide GST compensation amount. “If States take the loan to meet the shortage of GST collection, then the financial burden would fall on the States, and as Central government is responsible for payment of GST compensation amount, the loan repayment situation would become uncertain and complicated,” he wrote.
