You are here: Home » Current Affairs » News » National
Business Standard

States need hard cash, pay GST dues: Chidambaram to Centre

Former Finance Minister P Chidambaram slammed the Centre and alleged that these were just words of comfort on a piece of paper that has "no value"

P Chidambaram | Goods and Services Tax | Narendra Modi

IANS  |  New Delhi 

P Chidambaram

Following the government's proposal to give a 'Letter of Comfort' to the states to borrow money to bridge the GST compensation gap, former Finance Minister P. Chidambaram slammed the Centre and alleged that these were just words of comfort on a piece of paper that has "no value" .

"What states need is hard cash. Only the central government has multiple options and the flexibility to raise the resources and pay the shortfall in GST compensation to the states," Chidambaram said.

The senior Congress leader also said if the states were forced to borrow, the axe would inevitably fall on capital expenditure by the states which has already suffered a cut.

Many states have already rejected the offer, including Punjab, Tamil Nadu and Chhattisgarh.

Chhattisgarh Chief Minister Bhupesh Baghel has demanded that the central government should sanction Rs 2,828 crore to his state as GST compensation amount for year 2020-21.

Baghel, in his comment on the option of State Government taking loan to deal with the shortage in GST compensation, said that Centre had assured the states in GST council in year 2017 that any shortage in State Revenue after implementation of GST will 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 added.

Tamil Nadu Chief Minister K. Palaniswami wrote a letter to the Prime Minister and demanded states be paid the full compensation, and said the Centre has the moral and legal obligation to pay the states. He pointed out that asking states to borrow will reduce the overall resources available to the states by Rs 2 lakh crore.

He proposed that the central government should borrow and lend the money to the GST compensation fund with repayments to be made against future cess receipts.



(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, September 10 2020. 11:49 IST