Need to keep the extent of GST debt reasonable, Finance Secretary gave suggestions to states
Finance Secretary Ajay Bhushan Pandey has said that the quantity of debt should be ‘reasonable’ to catch up on the reduction in Goods and Services Tax (GST) revenue of the states, given its economic impact. Alongside this, he said that the Union will still urge the opposition-ruled states to choose the proposed loan scheme. He also said that the middle will take an ‘assurance from the states that this loan is going to be repaid only through GST compensation cess. The payment schedule is going to be fixed in such a fashion that after June 2022 the gathering within the cess pool is sufficient to pay the interest of the debt.
So far 21 states and three union territories have opted for the loan scheme proposed by the middle to compensate Rs 1.83 lakh crore within the collection of products and services tax of the states. Under the loan scheme, the middle will take a loan of Rs 1.10 lakh crore to catch up on the loss in revenue thanks to the implementation of GST. However, Kerala, Punjab, Pt. States like Bengal, Rajasthan, Chhattisgarh, and Jharkhand haven’t yet accepted the Center’s proposal. These states say that the middle should take a loan to compensate for the whole reduction of Rs 1.83 lakh crore in revenue. These states say that ‘classification like GST implementation and impact of Kovid-19 is against the law and unconstitutional.
Signs to extend FRBM limits
Pandey said that the extent of debt should be reasonable. He said that if a balanced approach isn’t taken, then the burden of interest will increase, which can affect the economy. It is often reduced to 5 percent with certain conditions. If there was no reason behind these limitations, then these limitations wouldn’t have happened. Since there’s a requirement to adopt a balanced approach under the Constitution, there are Articles 292-293. He said that full compensation is going to be given, but at this point, a loan adequate to one a part of it are often taken. The middle has released Rs 12,000 crore in two installments to 16 states and three union territories by taking loans from the market under a special facility provided by the Federal Reserve Bank.
Compensation fully secured,
Pandey said that the GST Council and therefore the central and state governments have all supported the cess from June 2020 onwards. In this case, compensation is totally safe. The compensation cess has been extended from June 2022, Pandey said. As far as debt cares, one should take a loan to the utmost level. Its decision should be within the purview of Articles 292 and 293. Article 292 of the Constitution says that the govt of India can raise debt within the deadline fixed by Parliament. At an equivalent time, Article 293 says that state governments can only raise debt from internal sources.
GST debt reasonable