Narendra Modi government is all set to borrow 1.1 trillion rupees to support the tax losses to the state governments amid the spread of Covid-19. The national goods and services tax (GST) laws made in 2017 mandate the decision of the government. Under this, the central government is liable to compensate the state government if the revenue collection fells below 14% in a year.
Earlier the central government has insisted the state authorities to borrow from the market to support their expanses as the centre is also facing the similar issue of lack of revenue collection during the period. 21 states mainly ruled by the NDA agreed to the government’s request while 10 states, which are ruled by the opposition parties, insisted the federal government to follow the GST mandate and compensate them.
In its latest statement regarding the issue the government said, “This will avoid the differential rates of interest that individual states may be charged”. It is to be noted that, the borrowing will be above the estimated market raised amount of 4.34 trillion rupees between October and March 2021.