GST Modi government to borrow Rs. 1.1 lakh cr on behalf of states for GST compensation
New Delhi/IBNS: After months of confrontation over the Goods and Services Tax (GST) dues, the Centre has decided to borrow Rs. 1.1 lakh crore on behalf of the states prompting Union Finance Minister Nirmala Sitharaman to explain the reason behind the government's change in stance over the issue, media reports said.
"Based on the suggestion of many states, it has now been decided that the central government will initially receive the amount and then pass it on back-to-back to the states as loan. This will enable ease of coordination and simplicity in borrowing, apart from ensuring a favourable interest rate," Sitharaman wrote in her explanation as reported by NDTV.
Earlier the central government had advised the states to borrow from the Reserve Bank of India (RBI) to compensate the shortfall in GST, irking various state governments.
The government had said it has a shortfall in revenue of Rs. 2.35 lakh crore for the fiscal year 2021.
The unprecedented anti-Covid-19 lockdown earlier this year has resulted in a massive drop in GST causing trouble to states over collection of taxes.
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