COVID-19 and the lockdown restrictions that had to be put inplace to prevent mass spread of the disease have taken its toll from thepocket of a common person to the highest levels of the bureaucracy.
Since the collections of the Goods and Services Tax (GST)have not been sufficient, the GST Council Meeting in its third consecutive dayof session, under the leadership of Finance Minister Nirmala Sitharaman,offered the states an option to raise loans to meet the shortfall.
The loans will be on the name of states.
The twenty states are Andhra Pradesh, Arunachal Pradesh,Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, MadhyaPradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim,Tripura, Uttar Pradesh and Uttarakhand.
It is worth noting that the opposition-led states wereagainst this option and the implementation of the same may strain the relationsbetween the centre and the state.
Another bone of contention is the legality of the move bythe centre i.e. is the GST Council authorized and permitted for such an action.
The primary dispute is that the centre borrows under its ownname and then transfers the funds to the states.
Some noteworthy responses include those from ChhattisgarhFinance Minister T.S. Singh Deo, who says, “Amid such critical conditions whenthe state govts need a helping hand from central govt, it is not onlywithholding the resources but also suggesting unacceptable methods to providecompensation,”
Another fallout could be a legal tussle between the centraland state governments.
M. Govinda Rao, member of the Fourteenth Finance Commissionand former director of the National Institute of Public Finance and Policy,said the central government’s actions will have long-term consequences, besidesthe fact that many of the states could decide to take the central government tocourt.
“It will damage the fabric of Union-state relations. Therewas so much camaraderie in the GST Council and no decision was taken alongparty lines. In the future, whenever there is a serious problem, there is arisk that decision will be taken along party lines,” he said.