West Bengal Chief Minister Mamata Banerjee today wrote this to Prime Minister Narendra Modi.
Kolkata, September 2: Instead of forcing the states to borrow, the Centre should borrow money to meet the shortfall in GST collection and give states the compensation promised to them at the time of implementation of the new tax regime.
West Bengal Chief Minister Mamata Banerjee today wrote this to Prime Minister Narendra Modi.
In a letter addressed to Modi, Banerjee said states would reciprocate by supporting a resolution for continuation of cess collection beyond five years till the entire debt of the Centre was completely liquidated along with inte re st payment. Mamata wrote that unlike the Centre, states did not have the power to monetise debt. The GoI also pays a much lower rate of interest for such borrowings. GoI can also raise resources to service debt, she argued.
States gave up 70 per cent of their taxing power, including VAT, to usher in GST, Mamata wrote, while adding tha t “the only condi tion for giving up of all these powers was the promise of full com pensation of shortfall in GST collection for five years under an agreed formula”.Mamata wrote that the late BJP leader Arun Jaitley had stated back in December 2013 that the sole reason why BJP was opposing the implementation of GST was because it did not trust the then central government regarding honouring its commitment of compensating the states for losses.
“Today, his (Arun Jaitley’s) words are ringing in our ears as we are losing trust in the BJP government at the Ce ntre,” Mamata wrote. She added that Modi himself, when he was Chief Minister of Gujarat, had opposed GST saying he did not have faith in the words of the UPA government then at power at the Centre. The Chief Minister wrote that two options, being thrust on the states, would both entail borrowing lakhs and crores of rupees at a time when some of the states were unable even to pay salaries and pensions to employees, not to speak of the neglect of development works.
The Chief Minister urged the Prime Minister to intervene and “rekindle the trust between states and Centre at the GST council – a trust that had held for over three years and 40 meetings of the council”. Mamata wrote that on behalf of all the states of the country including her own state, she would request him (Modi) to not belie the trust.
