States can borrow to fund GST compensation, Centre not obliged to pay: AG

K K Venugopal does not recommend borrowings by GST council; experts dislike the idea of burdening states with more debt

Attorney general K K Venugopal has given a way out to the Centre to wriggle out of the compensation mess under the goods and services tax (GST) system, even as he did not recommend borrowings by the GST Council.

He suggested that the Council can recommend to the Centre to allow the states to borrow on the strength of the future receipts from the compensation fund, sources said. 

He also said that there is no obligation on the Centre to pay the GST compensation shortfall, according to sources. Experts, however, did not like the idea of burdening the states with further debts.

Pronab