The Centre on Thursday offered a truce in the GST compensation matter by agreeing to borrow up to Rs 1.1 lakh crore, the estimated revenue shortfall on account of implementing goods and services tax (GST). The central government will lend to the states under a special window, following months of bitterness over the issue.
This decision comes four days after the latest GST Council meeting ended in an impasse over the compensation mechanism proposed by the government earlier. Following hours of discussion, the dissenting states had declared that they were open to exploring legal options, including moving the Supreme Court.
In view of the situation, Finance Minister Nirmala Sitharaman made the fresh announcement on Thursday. This is a positive development for many opposition-ruled states like Punjab, West Bengal and Chhattisgarh which had been nudging the Centre to borrow and fulfil the GST compensation commitment to states.
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