Kerala Finance Minister TM Thomas Isaac said on Thursday that the state does not accept the bifurcation of shortfall in GST compensation as two components—one regular shortfall and the second one due to Covid — and it is against the law.
He was reacting to the media after the GST Council meet, in which the Union finance minister gave states two options to bridge the funding gap created due to economic losses caused by Covid-19.
States have been demanding compensation from the government to meet the shortfall in revenue caused by lockdown to curb spread of Covid.
“Kerala opposed the Centre’s argument that the GST compensation was to make up for the normal losses due to GST implementation and not for Covid-related revenue fall. The legal advice by the Attorney General too does not mention such a classification. Kerala will not accept this,” Isaac said.
He added that Kerala will hold consultation with non BJP-ruled states on the two options suggested by the Union government to mobilise funds for GST compensation payment. The states have been given seven days to give their option.
Isaac argued in the council that the Centre should borrow the entire sum and distribute it among the states, as the Centre can mobilise funds at lesser interest than the states.