Andhra CM Jagan Mohan Reddy’s comments came at a time when some states are at loggerheads with the Centre as they oppose the latter’s option of borrowing.
Borrowing is the only option for states to overcome the crisis they face as the Centre is unable to finance the Rs 2.35 lakh crore GST shortfall in the current fiscal, said Andhra Pradesh Chief Minister YS Jagan Mohan Reddy.
In an interview with Hindustan Times, the chief minister said that “the only way to overcome the crisis is borrowing.”
Out of Rs 2.35 lakh crore GST shortfall in the current fiscal, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is due to the impact of COVID-19 on states' revenues, as per the Centre's calculation.
In late August, the Centre gave two options to the states, to either borrow Rs 97,000 crore from a special window facilitated by the RBI or Rs 2.35 lakh crore from the market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.
“The Centre has also asked the states to go for additional borrowings. As we cannot tax people more, we are working on possible additional revenue-generating options,” Reddy told the publication.
Reddy’s comments came at a time when some states are at loggerheads with the Centre as they oppose the latter’s option of borrowing.
Chief Ministers of at least six non-BJP ruled states of West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu have written to the Centre opposing these options which require states to borrow for meeting revenue shortfall.
Maharashtra Chief Minister Uddhav Thackeray also targeted the Centre and said it was "paap" (sin) that the Centre had not given Maharashtra its due GST share of Rs 22,000 crore, but is instead asking the state to seek loan.
Jharkhand Chief Minister Hemant Soren wrote to Prime Minister Narendra Modi on the centre not giving full GST compensation to the states, saying this "act of sovereign default" runs against the very spirit of the cooperative federalism.
Rajasthan Chief Minister Ashok Gehlot urged the Centre to fulfil the promises made to the state governments while implementing GST and leave it to them to have the right to some taxes levied by the Centre. He demanded Prime Minister Narendra Modi to intervene in the matter "to maintain confidence in the financial relations between the Centre and states".
(With inputs from PTI)