Tamil Nadu Chief Minister K Palaniswami on Monday urged the Prime Minister for a mechanism in which the Centre will raise the required funds as a loan and lends it to the GST Compensation Fund against future cess receipts so that the GST compensation can be paid in full to the States in FY2020-21
In a letter to the Prime Minister, the Tamil Nadu CM said, "our stance has consistently been that the Government of India has a moral and legal obligation to pay the compensation for the shortfall in GST collections. The argument that states borrowing for what is essentially a Government of India obligation is a seemingly better optical arrangement does not appear to be a strong or valid reason."
He asked the Government to ensure that the states get their full dues of the compensation in the current year itself along with the committed 2 per cent additional borrowing permissible to states under the Atmanirbhar Bharat stimulus package.
"Provide a formal and categorical assurance that any spillover of the compensation due will be paid in the period after March 31, 2022," said the Chief Minister urging to relax the conditions attached for the permission to states to borrow under the Atmanirbhar Bharat Scheme.