InvestorQ : Has there been a resolution to the GST row and are states willing to borrow now?
shrinidhi Rajan made post

Has there been a resolution to the GST row and are states willing to borrow now?

Answer
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2 weeks ago


The freeze on the GST issue is yet to be unlocked with the 10 non-BJP ruled states refusing to tow the government line on borrowing for their shortfalls as a temporary measure. They have been insisting that the centre transfers these funds to the states.

Meanwhile, on the back of consistent demands, the Ministry of Finance has allowed the other 20 states to raise up to Rs.68,825 crore via borrowings to meet GST revenue shortfalls in the current year. The fate of the dissenting states is not yet known.

The GST Council meeting on 12 October, despite having given enough time for deliberations and afterthoughts, was inconclusive. All the non-BJP states including Maharashtra and Bengal were unwilling to accept the borrowing model.

The consenting 20 states, including, Gujarat, Andhra and Tamil Nadu, have opted to go ahead and borrow to meet the shortfall arising out of GST implementation. The total immediate shortfall is Rs.97,000 crore for all the states put together.

Nirmala Sitharaman admitted there was still no consensus overall and that the dissenting states had actually refused to borrow on their accounts. One of the dissenting finance ministers, Thomas Isaac of Kerala has called it arm twisting tactics of the centre.