The Goods and Services Tax was created with the consent of the governments of all the states of the country. When it had been envisaged, one thing was involved from day one that the Chairman of the Empowered Committee of State minister of finances to be considered would be made the Finance Minister of the State who is the opposition of the ruling party in the middle. This was done in order that the opposition-ruled states had confidence that the central government wasn’t destroying their interests. However, later GST became law and GST became the council, its command was given to the Union minister of finance.
Within three years of enactment of the law, this council has now become a victim of politics. The whole law has come under the purview of party politics. The road the central government has assailed the payment of compensation of GST and suggested measures go to interrupt the economic backbone of the states. But the states ruled by the BJP and its allies have happily accepted that formula. All the state governments under the BJP rule have accepted the debt taking the formula and presented their choice to the GST Council. Quite a dozen state governments include BJP-ruled states also as Bihar’s ally party government and Odisha’s indirect ally government.
Now only five-seven states are ruled by Congress and opposition parties. So it’s not difficult to know what is going to happen to their opposition. But it’s not that later the problem goes to return just for these states. The state governments of BJP, which are considering the formula of taking loans to avoid putting their party’s central government in embarrassment, also will face an enormous problem.
At this point, it’s been said that to catch up on the shortfall within the recovery of GST revenue, the states should take a loan and can repay it later if the compensation is recovered. But the question is, what if the recovery remains low? it’s said that thanks to coronavirus infection and lockdown, revenue collection has reduced. But this is often not the truth. Revenue collection has come down since August last year. The cess levied on GST for compensation has been recovering for fewer than a year. In anticipation of that recovery, it’ll be very difficult for them to repay the government which is taking a replacement loan. Since the state governments are taking loans in their account, the central government isn’t obliged to repay it. In the end, the debt will need to be paid by the states only. Whether there’s a sufficient collection from the cess levied for compensation in GST. States are realizing this, but within the spur of party politics, they’re throwing the state into the morass.