Considering the less than expected increase in GST cess fund, the State’s Agriculture Minister Subodh Uniyal suggested to the GST council that to fulfil the state’s compensation requirements the option of taking a loan from the market could be considered. The Centre could also take a loan to pay compensation to the states, he opined. The minister said this while representing the Statein the 41st meeting of the GST council chaired by the Union Finance minister Nirmala Sitharaman through video conferencing on Thursday.
The meeting was called to discuss means of fulfilling the compensation requirements of the state considering the less than expected increase in revenue through GST cess.
Due to structural changes related to transfer in the new system and conditions resulting from the Covid-19 pandemic exerting a negative impact on tourism and consequently revenue, Uniyal requested that the compensation requirements of the state should be fulfilled. At the end of the meeting, the Union Finance minister presented two options to the states to meet their compensation requirements. The States can either pick up the entire compensation by borrowing from the government or pick up a limited amount through a special window in consultation with the RBI and receive the remaining amount by the end of 2022.