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Photo: Hindustan Times
Photo: Hindustan Times

An act of justice

It would be best if the Union took on any extra debt needed for GST shortages to be plugged. That would put an end to the dispute and foster a sense of national unity in our fight against covid

In a dramatic turnaround, the Centre appears to have shifted its position on compensating Indian states for their goods and services tax (GST) revenue shortfall. On Monday, word emerged that the entire sum of compensation will be “honoured", with 97,000 crore to be transferred right away and the rest deferred over a period to be decided at the next GST Council meeting.

This could spell relief for the states, which have been adamant that the Centre’s pre-GST promise be upheld, regardless of its covid-emptied coffers. Yet, it’s still not clear exactly what the government’s revised proposal is. Earlier, it had wanted states to borrow money to cover their GST gaps, with an extended cess helping them repay. Opposition-ruled states saw that as a violation of cooperative federalism. While the Centre seems to have relented, some wonder if the deferral plan has strings attached that would somehow shift large liabilities onto states anyway. It would be best if the Union took on any extra debt needed for GST shortages to be plugged. That would put an end to the dispute and foster a sense of national unity in our fight against covid.

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