Welcome Centre's decision to borrow Rs 1.1 trn to fill GST gap: Chidambaram

P Chidambaram welcomed the change in the position of the central government which will now borrow Rs 1.1 trillion and extend it to states to make up for the shortfall in the GST compensation.

Senior Congress leader P Chidambaram on Thursday welcomed the change in the position of the central government which will now borrow Rs 1.1 lakh crore and extend it to states to make up for the shortfall in the GST compensation.

"If the centre has decided to borrow the Rs 1.1 lakh crore and extend it to the states as back-to-loans, I welcome the change of position. I thank all the economists, academicsand newspaper editors who had supported our position," the former finance minister said on Twitter.

The Central government earlier in the day announced that it will borrow up to Rs 1.1 lakh crore on behalf of the states to bridge the shortfall in GST collections.

A slowdown in the economy since last fiscal has resulted in a drop in the Goods and Services Tax (GST) collections, upsetting the budgets of states which had given up their right to levy local taxes such as sales tax or VAT when GST was introduced in July 2017.

To make up for the shortfall, borrowing from the market was proposed but non-BJP states refused to accept the proposal and asked the Centre to borrow instead.

In a statement, the Union Finance Ministry said states were being offered a special window to borrow Rs 1.1 lakh crore over and above their existing limits, to bridge the shortfall.