Page 37 - GSTL_3rd September 2020_Vol 40_Part 1

2020 ] NEWS DESK J19
Centre arm-twisting us : States call out ‘betrayal of
federalism’
Following a five-hour-long GST Council Meeting on 27-8-2020, States ac-
cused the Centre of ‘arm-twisting’ them to borrow, terming it a ‘betrayal of fed-
eralism’.
Despite being given seven days to examine the two options offered by
the Centre, they turned those down minutes after the Meeting concluded. Most
States pressed for borrowing by the Centre to compensate them for the shortfall
in collections.
During the meeting, the Centre gave the States the option to either bor-
row ` 97,000 crore (shortfall according to the formula given under the law), or
the entire ` 2.35 trillion that accounts for the excess shortage in view of the
COVID disruption.
T.S. Singh Deo, Finance Minister of Chhattisgarh, said States were being
arm-twisted to get the compensation, which was Constitutionally guaranteed to
them. He questioned why the Centre wasn’t taking the loan, given there would
be no repayment burden on States and the entire principle plus interest would be
repaid through cess collection anyway.
“They are saying the entire principle and interest will be repaid using
cess, which will continue after the five-year timeline. They agreed to raise our
FRBM (Fiscal Responsibility and Budget Management) limit. If there is no finan-
cial burden, why can’t the Centre take the loan itself, instead of asking States and
UTs to take it separately?” said Deo.
Manish Sisodia, FM of Delhi, called the offer a ‘betrayal of federalism’.
He said the option to avail of a loan from the RBI will not work for Delhi because
it does not have the right to take a loan, as it is not a full State.
“The Centre is shirking responsibility. In case of Delhi, as it is not a full
State, it therefore doesn’t have the right to take a loan,” said Sisodia, adding that
the Delhi Government was facing a 57 per cent shortfall compared to the Budget
target. “The Centre should take the loan and give it to Delhi, as we have to give
salaries to doctors, engineers, and teachers,” he said.
Delhi faced a ` 7,000 crore revenue shortfall for the first quarter, which is
expected to widen to ` 21,000 crore by the end of the year. “They took away out
taxing rights and are now asking us to take a loan from the RBI. It is the biggest
betrayal in the name of federalism,” he said.
Puducherry concurred with Delhi. “There is going to be a big problem
for us. We are a Union Territory, so when we go for market borrowing and get
permission from the RBI, it has to go through the Home Ministry; it is not possi-
ble for us to borrow directly,” said Chief Minister V. Narayanaswamy.
The cess should not only be for 5 years, but increased to 10, said
Puducherry. Badal said all States were in financial crisis and “we have to get
money and save our people”.
Punjab FM Manpreet Singh Badal said the solution of requiring States to
borrow was being “thrust on us”.
“They want to thrust the option of borrowing on us. The Meeting went
on for 5 hours, but it was not a happy atmosphere. Trust deficit was clearly visi-
ble. The AG’s views were read out but not circulated. We are answerable to our
legislatures and Cabinet,” said Badal.
GST LAW TIMES  3rd September 2020  53