GST compensation: KCR requests PM Modi to reverse 'states should borrow' decision

On Tuesday, Telangana CM K Chandrasekhar Rao urged Prime Minister Narendra Modi to reverse decision of asking states to meet shortfall in GST compensation through borrowings. Maintaining that it was imperative to strengn cooperative federalism in this crisis situation, he stressed that development in any part of country shall contribute to India's development. Rao suggested that Centre can borrow shortfall amount on strength of receipts into cess amount.

He added that entire debt servicing can be paid from cess collected for an extended period decided by GST Council. Recalling that all decisions have been taken unanimously by GST Council so far, Telangana CM expressed hope that this tradition would continue in future as well. Additionally, he exuded confidence in PM looking at proposed alternative in a positive manner. Apart from Telangana, or states such as Kerala, Chhattisgarh, West Bengal and Rajasthan have also rejected Centre's options on bridging GST compensation gap.

Read: Tamil Nadu CM Writes To PM Modi Over GST Compensation Of States; Cites Difficulty

Read: Chhattisgarh CM Writes To FM Sitharaman Opposing Centre's Options For GST Compensation

Rao opines on GST compensation

In letter addressed to PM, Rao stated that his government had supported introduction of GST in national interest. Citing provisions of GST Compensation Act, he complained that re have been long delays in payment of compensation and that states have t been paid GST compensation since April 2020. According to him, Centre's attempt to make a distinction between loss of revenue on account of GST implementation and impact of COVID-19 was t provided for in GST Compensation Act.

Observing that states have yielded more fiscal to facilitate introduction of GST, he lamented that Centre was denying m ir legally rightful claims during COVID-19 period. Moreover, Telangana CM mentioned that expectation of states on share of cess and surcharges coming down has been totally belied. ting that states are at forefront of reviving stalled ecomic activities amid pandemic, he claimed that y need more resources than Centre. Rao contended that Union government was abdicating its responsibility of fully compensating states by taking recourse to legal opinion. 

Read: Asking States To Borrow Is 'skewed Idea': Deve Gowda On GST Shortfall

Read: Rajasthan Govt Asks Centre To Release Pending GST Compensation Worth Rs 6,690 Cr