Centre to facilitate borrowings for proposed options against future GST collections
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New Delhi, October 13: Finance Minister Nirmala Sitharaman on Tuesday said that the Centre will facilitate borrowings for the States which want to go ahead with its proposed borrowing options against the future GST collections. The move which aims at compensating the States for their GST revenue shortfall amid the global pandemic has been supported by the majority of the finance ministers of the States and Union territories.
Briefing media in New Delhi after the 43rd GST Council meeting, Sitharaman informed that 21 States and Union Territories have agreed to borrow money on their own but a complete consensus on the matter is still awaited. She said, the council will further discuss to sort out differences with the remaining States which are asking the Centre to borrow on their behalf.
FM @nsitharaman is chairing the GST Council meeting via video conferencing in the presence of MoS @ianuragthakur, Finance Ministers of States & UTs and Senior officers from Union Government & States.
— Office of Mr. Anurag Thakur (@Anurag_Office) October 12, 2020
| @FinMinIndia @GST_Council | pic.twitter.com/A6StHa97Qm
Further, the finance minister asserted that in case the Centre borrows and pays the states for the shortfall, it would lead to a rise in borrowing costs both for the government and the private sector. Presenting the details, she informed that any rise in the Government Securities in lieu of the borrowings by the Centre will result in hike in the borrowing costs for other entities.
She meanwhile also reassured the States that the entire interest and principal amount for the amount borrowed by them will be paid from the Compensation cess. The council has already extended the period of cess beyond the five-year transition period which was supposed to end in June 2022.