GST shortfall: Centre to borrow ₹1.1-lakh cr and on-lend to States

Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP, said the Centre borrowing ₹1.1-lakh crore should not be interpreted as the government yielding to the requests of the States. What is raised by the Centre “would be passed on to the States as back-to-back loans and would not have any impact on Central Government’s fiscal deficit. This would still stand as the liability of the States. The dissenting States wanted the Centre to absorb the liability without passing it on to States. The Centre has stuck to its ground and borrowing in its name is only for operational convenience and it should not be construed as the Centre yielding to the States. The dissenting States have indicated that they will knock at the doors of the judiciary and a legal battle is set to take place. The Attorney-General’s opinion would be tested in the courts now,” he said.