new Delhi. To compensate for the shortfall in Goods and Services Tax (GST), the central government has planned to borrow Rs 1.10 lakh crore. For this she will pay them to the states. However, it has also been said by the Finance Ministry that the states will get this amount as a loan. Former Finance Minister P. Chidambaram welcomed this decision of the Center regarding the financial help of the states. He said that now the government should take steps to end the deadlock so that trust can be restored between the Center and the states.
P. Chidambaram said that by tweeting on Friday, Finance Minister Nirmala Sitharaman wrote to the states that the central government would borrow Rs 1,10,208 crore and give back-to-back loans to the state governments. This decision after the change of heart of the government is welcome. However there is no clarity on the balance of difference in GST compensation. There is no clarity in the letter of the Finance Minister on who will borrow money and how the loan will be repaid. The senior Congress leader also said that many states are opposed to borrowing on their own account, which is absolutely correct. He said that there is no difference between the first and second sign. The Center should immediately resolve the deadlock by offering similar terms of Rs 1,06,830 crore as it has offered Rs 1,10,208 crore.
Chidambaram has said that the first right step has been taken by the government towards ending the tension between the Center and the states over the payment of GST compensation. He said that ‘Now I urge the Prime Minister and the Finance Minister to take a second step and re-establish trust between the Center and the States’.
It is noteworthy that the Finance Ministry had said on Thursday that the central government will take a loan of Rs 1.1 lakh crore to meet the shortfall in the GST of the states. Taking this amount as a loan in appropriate installments will not affect the government’s fiscal deficit. After this, the amount will be given to the states as loan after successive GST Compensation Cess release.
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