Finance Minister Nirmala Sitaraman chairs 43rd GST Council Meet
On October 12, 2020, the Finance Minister Nirmala Sitaraman chaired 43rd GST Council Meet. The council for the third time discussed the issue of revenue shortfall of states. Before the meet, the minister announced a slew of economic measures to boost consumer demand in the country.
Key Highlights
- The meet ended without conclusions.
- Majority of the states have opted for Option 1. However, the states complain that the collection of cess is inadequate to pay the compensation.
- The minister said that Centre cannot borrow more as Government Security Bond Yield may go high.
Background
The states are facing revenue short fall of Rs 2.35 lakh crores. This includes losses due to GST implementation and COVID-19 led economic slow-down. The Finance Minister earlier placed two options for the states to resolve the issue. They were
- OPTION 1: Rs 97,000 crores is to be provided under consultation with RBI at reasonable interests. The states shall repay the money after five years through collection of cess. Here the interest is also to be paid through collection of cess.
- OPTION 2: The other option was to borrow the entire deficit of Rs 2.35 lakh crores. Here the interest is to be paid by the states
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Month: Current Affairs - October, 2020