States against market borrowing to bridge revenue gap under GST

by Nidhi Bhati

Several state governments have voiced against the Attorney General’s suggestion to let states bear the burden of market borrowing to meet their impending revenue shortfall under Goods and Services Tax (GST), as per media reports. Punjab’s Finance Minister Manpreet Singh Badal in a letter to Finance Minister Nirmala Sitharaman pressed for market borrowing by the Centre to make up for the inadequate cess collection apart from operationalising the dispute resolution mechanism to settle the issue. Badal also recommended measures like widening the scope of compensation cess to cover more goods and services. According to Punjab Chief Minister, it is the responsibilities of the Centre to pay states for the revenue loss, as promised during the GST rollout.