Telangana sad over Centre ‘forcing’ states to borrow to make up for GST shortfall

Naveen S Garewal 

Tribune News Service

Hyderabad, October 13

Telangana has expressed it displeasure over the Centre’s move to force states to borrow Rs 1.1 lakh crore to meet the shortfall in GST. 

State Finance Minister T Harish Rao has alleged that the Centre was going back on its earlier offer to the states, which was “unfair” and “unjustified”. 

“The Centre had given the states two options — raise the entire amount of Rs 1.1 lakh crore from financial institutions with the Centre as guarantor for both principal and interest amount or go in for market borrowing amounting to Rs 1.83 lakh crore, including losses incurred during the lockdown period,” he said.

Rao said instead of states, the Centre should borrow to compensate them for the GST losses they have incurred. 

“The Union Government, instead of compensating the states for the entire Rs 1.83 lakh crore losses incurred by them, has instead taken the easy way out by opting for the first option and asking states to borrow Rs 1.11 lakh crore,” he added. 

This would amount to unnecessary burden on the states and put the states in a fiscal distress for no fault of theirs. The Finance Minister, who was echoing the thoughts of Chief Minister K Chandershekhar Rao (KCR) said the Centre was over-stretching itself and had for the first time taken a unilateral decision without taking the states into confidence. 

“We demand that the Centre release Rs 723 crore as recommended by the 15th Finance Commission. This is the one time compensation recommended for the losses incurred by Telangana on account of reduction of the state’s share in the central devolution taxes from 2.43 per cent to 2.13 per cent”. 

Rao said the unilateral decision of the Centre would hurt the financial interests of states like Telangana, Maharashtra and Karnataka. “We demand a discussion on consolidation of borrowings suggested under option 1 and option 2 proposed by the Centre, which have a difference of Rs 73,000 crore,” he said.

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