oppn parties GST Compensation: An Act Of God Does Not Absolve The Head Of The Family From Responsibilities
OPINIONS : Strongly Expressed

January 29, 2023

People Are Talking About

Welcoming 2023

News Snippets

  • RBI governor Shaktikanta Das says that inflation is easing and the current account deficit is manageable
  • Adani Enterprises FPO sees just 1% subscription on the first day as the stock goes down to Rs 2762, much below the price band of Rs 3112-3276
  • Stocks bleed on Friday post the Hindenburg report as Adani stocks are hammered: Sensex loses 874 points to 59330 and Nifty 287 points to 17604
  • Rs 263cr TDS scam detected by the I-T department. A mid-level officer was the kingpin and had amassed huge wealth
  • Women's U-19 World Cup -India reaches the final by beating New Zealand by 8 wickets
  • New Zealand beat India by 21 runs in the first T20 as spinners choke Indian batters
  • Sania Mirza and Rohan Bopanna lose in the Australian Open finals
  • Sania Mirza and Rohan Bopanna lose in the final of the Australian Open
  • India to play New Zealand in the first T20 of the three-match series in Ranchi today
  • RBI has proposed special purpose vehicles (SPEs) mechanism to sell bad loans to interested investors via securitization
  • JD(U) decides not to attend the Bharat Jodo Yatra finale in Srinagar
  • Hindenburg defends its report on the Adani group, dares Gautam Adani to sue it in the US
  • BJP's talks with Tipra Motha in Tripura make no headway but the party is confident of winning in the ensuing elections
  • Pathan is a super hit at the box office: Rs 57cr in India (worldwide Rs 106cr) on Day 1 and then Rs 70cr on Day 2 which was Republic Day holiday
  • Centre tells Delhi HC that Covid vaccines can't be mixed when taking the second dose
A Mirage2000 and A Sukhoi 30 of the Indian Air Force on a training mission crashed separately, in Bharatpur in Rajasthan and Morena in Madhya Pradesh, killing one pilot
oppn parties
GST Compensation: An Act Of God Does Not Absolve The Head Of The Family From Responsibilities

By Sunil Garodia
First publised on 2020-08-28 09:03:02

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

When the GST was being introduced, many states refused to come on board for the simple reason that they feared that any shifting to 'one nation one tax' system would result in a shortfall in their tax collections compared to the system of excise, VAT and several other taxes that was being followed then. The Centre had placated them and brought them on board by promising to make good the shortfall for five years. A cess was levied on GST for the purpose, but it was not made clear whether the states were to be compensated only from the amount collected through the cess. One thing was clear though - that the onus was on the Centre to make good any shortfall suffered by the states for a period of five years.

The Centre now wants to renege on the promise citing "an act of God." The Covid-led disruption might be a handy excuse to lay the blame of the precarious state of the economy at God's door, but the Centre has withheld payments to states from the third quarter of the last fiscal, when problems of low consumption, and hence low tax collections, first started raising their head. The Centre and the states are like a family, with the Centre being the head. Does the head of the family leave other members of the family to their own devices in times of crises, even if they are acts of God? In fact, in such circumstances, the responsibility of the head of the family increases manifold.

None of the solutions provided by the Centre for states to tide over the difficult times show that it is acting as the head of the family or is trying to mitigate the problems they are facing. It wants the states to either borrow a part or the entire amount of the shortfall (at reasonable rates of interest) from a special window to be created by the RBI upon the Centre's guarantee. What does this mean? It simply means that the states will have to borrow despite the money logically being theirs and then pay interest on it. This is highly unfair. Ideally, since it had promised to compensate them for the shortfall, the Centre should borrow and compensate the states.