The 5th economy is likely to be delayed on Monday as the federal government and some states do not agree on who to borrow to cover the revenue shortfall.
Prime Minister Narendra Modi’s party and its allies have agreed to borrow from the market of 21 ruling states. Unions in 10 out of 10 states run by opposition parties have demanded that loans be taken and repaid.
Under the National Goods and Services Tax (GST) of 201 nationals, the federal government is required to pay compensation to the state government by 2022 if the revenue growth of the states falls below 1% per annum.
But the coronavirus crisis in the states has resulted in a tax deficit of about tr trillion rupees (१ 1 trillion) in the fiscal year ending March. They are expected to get around Rs 50,500 billion from the federal government alone.
“There is no consensus among the GST council members on borrowing,” Nirmala Sitharaman told a news conference.
Some states have said they will take the dispute to the Supreme Court and blame the federal government for violating the agreement.
Sitharaman said the government would go ahead with the states that have agreed to take loans but declined to comment on how to settle disputes with others.
“The stalemate is likely to continue,” said Rajat Bose, a partner with Shardul Amarchand Mangaldas, an expert on tax matters.
“The only certainty is that the surcharge will continue beyond 2022, which means that the shortage of these customers will be reduced,” he said.
This story has been published from the Wire Agency feed without altering the text. Only the caption has been changed.