Thursday 29 October 2020

GST Council Imbroglio A Farce By Obstructionists

A government can't be responsible for the correction of poor policies of another, which pushed a few states to GST deficits worse than others'

It is strange that a borrower with a record of poor financial management would lay down the terms not only of borrowing money to repay its debt but also set the terms of repayment. And that is the exact nature of the impasse in the 42nd meeting of the GST Council, an otherwise rare forum that has lived up to the spirit of federalism since its inception. From the fact that 21 states ruled by the BJP or its allies in the NDA have agreed to the first choice of borrowing and repayment while three provinces run by adversaries of the party ruling at the centre have been recalcitrant. If the stubborn states have not accepted the special window provided in consultation with the Reserve Bank at a reasonable interest rate for the borrowing of Rs 97,000 crore and repay the amount after five years (of GST implementation) from cess collection, they have not opted for the option of borrowing the entire sum of Rs 2.35 lakh crore worth of deficit under the special window either.

First, if the finance ministers of Kerala and West Bengal say they cannot afford to repay with a rate of interest as ‘high’ as the union government is offering, it is ludicrous to suggest the states were borrowing from the markets at a lower rate. Second, if both the options of repayment put the burden of deficit squarely on the states, that is how it should be. For, even prior to the new regime, the union government has been devolving power and sharing a much greater chunk of the revenue with the states. When it is noted that there has been 33% less SGST collection during the period between April to August this year, compared to the same period last year, due to COVID, the greater revenue share of the states cannot be overlooked, especially as the union government has been no less affected by the global pandemic.

In any case, one government cannot be responsible for the maintenance of unsupportable populism of another. It may be noted that the opposition-ruled states often do not accept the welfare schemes of the Narendra Modi government, lest the BJP should run away with the credit, but their own plans for the poor, health, education, infrastructure, etc — in the absence of private sector investment especially in Mamata Banerjee’s state — add extra load on the state exchequers. While Andhra Pradesh, Nagaland, Maharashtra, Tamil Nadu, Sikkim and Uttarakhand have recorded high market borrowings, they are not playing truants in the GST Council meets. Now, if West Bengal, Punjab and Kerala do not fall in line by the time of the next meeting of the council, slated for 12 October, the matter must be resolved by votes. Vastly outnumbered that the opposition-ruled states are, they will lose. The belligerence they will display thereafter via tweets, if not press conferences in COVID times, can be foreseen. That will, of course, do no good to their economies. Finally, whatever the centre or a state pays, it is, in effect, the citizens who have paid a fair share of their hard-earned money to both already, which is why the issue, if raised by a party, will gain no political traction, the obstructionists must note.

Sirf News Editorial Board
Sirf News Editorial Boardhttps://www.sirfnews.com
Voicing the collective stand of Sirf News' (सिर्फ़ News') editors on a given issue
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