DW BUREAU / Chandigarh Punjab Finance Minister Manpreet Singh Badal on Monday outrightly rejected the Centre's proposal of borrowing by states to meet shortfall in GST revenue and dubbed it as a "clear breach of the solemn and constitutional assurance and betrayal of spirit of cooperative federalism." In a letter to Union Finance Minister Nirmala Sitharaman on Monday, Badal asked her to reconsider the decision, which was taken at the last Goods and Services Tax Council (GSTC) meeting. Badal sought another urgent meeting to seek "full clarity" on the issue and also demanded the constitution of a group of ministers to "deliberate on the matter and make recommendations in a time-bound period of 10 days." The Centre and Opposition-ruled states like Punjab, Kerala, Delhi and West Bengal are at loggerheads over the financing of the Rs 2.35 lakh crore Goods and Services Tax (GST) shortfall in the current fiscal. Of this, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is the impact of COVID on states' revenues. The Centre last week gave two options to the states to borrow either from a special window facilitated by the RBI or from market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022. The Punjab finance minister drew attention towards the statements of the then chairperson that the compensation would be 100 per cent of the revenue loss. "It would be paid within the stipulated period of 5 years; it is the central government that has the obligation to pay; only the manner of funding was to be decided by the Council and If there were to be shortage, the required funds could be borrowed," he reminded. He said that the union government was unable to persuade itself to agree with these submissions and has now offered the two options breaking from a recorded past that has force as good as that of law. In the letter, Badal said that Punjab was now the "highest GST-deficit-state in India." "Our revenue loss in first option would still remain unpaid even after availing our share of the special window as well as the additional 0.5 per cent of the fiscal deficit," wrote Badal. "There may be other states on similar footing. Leaving the latter borrowing unprotected by any future revenue stream means the practical impossibility of such a borrowing, besides putting the state into a position of great peril," he stated. On the second option, Badal said, "There is no rationale for the Centre to charge the cost of borrowings to the states." (editor@dailyworld.in)