No consensus arrived at GST Council meeting on borrowing options: Nirmala Sitharaman

Addressing reporters here after the GST Council meeting, Sitharaman said, "Unfortunately, we were not able to arrive at a consensus. I appealed to all states - we have to quickly give answers to states who are fighting COVID19 on the ground and who want money in their hands - that is how the GST Council meeting ended today."

She said, "GST Council can certainly take a call on cess, collection of cess, extending cess collection period. But members had the question, can the GST Council order?"

Sitharaman said, "There is no dispute, we may have differences."

"There is no dispute on this, the entire compensation has to be paid, it will be paid," she stressed.

The minister said GST Council has been gracious enough in unanimously agreeing to extend the cess beyond 5 years, to repay the principal and interest of the entire compensation.

"Does the collective conscience of the GST Council in its quest for unanimity, which I too strived for, allow us to hold back states which have opted for a borrowing option, saying we have to hold you back till a consensus is arrived at? I asked this to the members," she said.

Sitharaman said borrowing options for states to be facilitated in a manner that borrowing costs do not spike for any state.

She said the meeting started with each state thanking the Centre for the provision of 50-year interest-free loans announced on Monday, as well as on the additional fund allocation for capital expenditure.

"Eventually, it was a question of having heard everybody; after all clarifications were given, I explained very clearly that GST Council is a body which represents a very high authority of Finance Ministers of all states," Sitharaman said.

As regards shortfall in compensation, it is for everyone to see that cess collection is inadequate to meet the shortfall. Since this is something which was not envisaged, the shortfall has to be met by borrowing, she added.

She said, "The Centre has issued a borrowing calendar if I go beyond that to borrow, the G-Sec deals which are used as a benchmark for every other borrowing will go up, this will hence increase borrowing costs for states & private sector too."

Many of the clarifications were in Attorney General's opinion on borrowing, GST Council's authority to extend cess collection beyond 5 years, she said.

Earlier, she said Monday's meeting was a continuation of the 42nd GST Council meeting, to discuss one agenda item, namely number 9A.

In the previous meet on Oct 5, the Finance Minister said some changes to the borrowing options have already been made, based on states' inputs to meet compensation gap shortfall.

Instead of Rs 97,000 crore provided as the first borrowing option earlier, the amount now has been made Rs 1.1 lakh crore.