The tax burden of 4 lakh crores thanks to Corona crisis, pressure on states to extend borrowing
States are forced to borrow at higher rates if the central government isn’t obliged to catch up on the products and Services Tax (GST) deficit. Consistent with the assessment, the states may need to bear a tax loss of about four lakh crore rupees thanks to the Corona crisis. Within the opinion of experts, the central government should find an alternate way and are available forward to assist the states.
Former Economic Affairs Secretary Subhash Chandra Garg said during a conversation with Hindustan that the central government isn’t obliged to compensate the states for the losses thanks to the epidemic. In such a situation, the GST Council should increase the tax on some things and compensate for the deficit of the states. The GST Act provides that within the event of a loss, it is often repaid by increasing the tax. Although the states even have the choice to borrow, which will not be in their interest. He has also advised that either the Central Government or the GST Council should take the responsibility of meeting the economic needs of the states by borrowing.
Economic affairs expert Pranab Sen said that within the era of the Corona crisis, the economic burden on the states is increasing. He said that states need to bear the value of treating people also as providing them with employment. In such a situation, they’re going to need more financial help within the coming days. It’s estimated that thanks to the Corona epidemic, the states will have a loss of about Rs 4 lakh crore in tax this year.
Pranab Sen also said that the middle has given the choice of borrowing to the states. But if the states attend borrow, they’re going to get expensive loans than the central government. At an equivalent time, the states will need to bear the loss of debt for an extended period. In such a situation, their situation is going to be worse. He has suggested that the Central Government should find how to supply funds to the states while trying to find a ward to the financial help of the states and therefore the minister of finance looking for an alternate way.