The Union government has taken a U-turn on who will take the biggest debt dispute between the central government and the states to meet the GST compensation shortfall. The Union Finance Ministry said that the Center has received Rs. 1.10 lakh crore loan. And will provide loans equivalent to all the states in return for their share. According to a statement issued by the finance ministry, the Centre’s fiscal deficit will not be affected. This amount will be shown in the Centre’s account as a capital gain. Will return in the form of financial aid for the fiscal deficit of the states.
An additional 2 per cent loan facility will be available
The government has clarified that the move will not increase the number of loans provided by the government. States benefiting from the special window under the self-reliance package will be able to avail additional loans of 2 per cent for state gross domestic product. The Center has not clarified who will pay the principal amount of the loan or the interest. According to experts, the loan will be repaid by the amount received through the compensation cess. In the current financial year, a total of Rs. GST collection is projected to decline by Rs 2.35 lakh crore. 1.1 lakh crore GST has been implemented.
Two major benefits from government decisions
No effect on the Centre’s fiscal deficit
The system is designed keeping in mind all the issues. The Center is taking loans, but this amount is being given to the states as loans. Not in return. As a result, Rs. 1.10 lakh crore debt has come. While on the other hand Rs. 1.10 lakh crore has been incurred. As a result, the fiscal deficit will be zero.
The big question is why the case was prolonged for so many days
Opposing states have always demanded that the loan be taken by the central government. Do not force states to take. The Centre’s old stance was that if the Center took a loan, it would raise interest rates. As a result, it will be difficult to get a loan. But if the current option was already available. So why did this case take so long?