Kerala Finance Minister Thomas Isaac on Saturday said that GST compensation issue which could have been resolved easily by the central government has now become a big dispute between the states and the centre in the federal system.
“It reveals the mindset of the BJP ruled union government that irritates and challenges the states. It can be solved easily with the central government borrowing the shortfall at a much lower interest rates,” he said.
“The central government can borrow from the open market directly. If the Government thinks that it is difficult to borrow from the open market it can borrow from RBI as done by several governments across the world,” he added.
Isaac was talking to reporters on the GST compensation issue in which the Union finance minister gave states two options to bridge the funding gap created due to economic losses caused by Covid-19.
He added that Kerala rejects the two options put forward by the Centre for borrowing by states to meet the shortfall in tax revenues. “Full compensation is the constitutional right of states. In both options for GST compensation proposed by Union finance minister, states will have to sacrifice a part of the compensation,” he said.
Isaac said that finance ministers of non-BJP ruled states are scheduled to discuss the issue on Monday evening.