Centre’s promise of a letter of comfort to State govts to borrow money for bridging the GST compensation gap have no value: P Chidambaram
The Rajya Sabha MP further went on to add that if the State governments are forced to borrow money by the Centre "the axe will inevitably fall on capital expenditure by the States which has already suffered a cut."
New Delhi: The Centre’s promise of a letter of comfort to the State governments to borrow money for bridging the GST compensation gap have no value, said senior Congress leader P Chidambaram on Thursday.
The former Union Minister said that the State governments need “hard cash” at this point to meet the shortfall between GST (Goods and Services Tax) compensation, and added that the “options and flexibility” for which this are only available with the Centre.
“Government says it will give a ‘Letter of Comfort’ to the states to borrow money to bridge the GST Compensation gap. These are just words of comfort on a piece of paper that has no value,” Chidambaram said through a tweet from his official handle.
“What states need is hard cash. Only the central government has multiple options and the flexibility to raise the resources and pay the shortfall in GST compensation to the states,” he added.
The Rajya Sabha MP further went on to add that if the State governments are forced to borrow money by the Centre “the axe will inevitably fall on capital expenditure by the States which has already suffered a cut.”
Several Chief Ministers, including those of Jharkhand and Punjab, among others, have urged the Centre to rethink the decision of asking States to meet the shortfall in GST compensation through borrowings.