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In Letter to FM Sitharaman, Chhattisgarh CM Rejects 'States Should Borrow' Plan, Lists Other Ways to Bridge Deficit

File photo of Chhattisgarh CM Bhupesh Baghel.

File photo of Chhattisgarh CM Bhupesh Baghel.

Bhupesh Baghel made the statement after the Centre on Thursday presented two options to states under which they can borrow from the market to make up for the estimated deficit of Rs 2.35 lakh crore this fiscal.

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Vivek Trivedi

Chhattisgarh Chief Minister Bhupesh Baghel, in a letter to Finance Minister Nirmala Sitharaman, urged the Centre to arrange funds "on its own" and not pressurise states to borrow in lieu of the GST compensation.

Baghel made the statement after the Centre on Thursday presented two options to states under which they can borrow from the market to make up for the estimated deficit of Rs 2.35 lakh crore this fiscal.

He said although the states should have received the GST compensation within two months, during the financial year 2020-21, they were yet to receive it even after four months. He added that the Chhatisgarh government was awaiting Rs 2,828 crore from the central government.

The Chief Minister said that the GST compensation was a constitutional obligation of the Centre.

“With the borrowing option, states will be burdened unnecessarily. With the payment to be carried out possibly by Centre, uncertainty would prevail over the repayment," he said.

He said the the Centre receiving cess for GST compensation and repaying the state’s borrowing could prove to be a cumbersome process.

"In my view, states should not borrow for GST compensation, and the Centre should arrange the necessary funds for the purpose through it’s resources and loans," he said, urging the Centre to consider his suggestion.


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