GST compensation: Karnataka opts for first among two options offered by Centre
Bengaluru: BJP ruled Karnataka on Wednesday said it has decided to opt for the first among the two options offered by the Centre for borrowing to meet the shortfall in GST revenues, under which the state will be eligible for total compensation of Rs 18,289 crore.
The decision was taken after Chief Minister B S Yediyurappa, who also holds the finance portfolio, held discussions with Finance department officials.
"After the evaluation of both these options, it is felt that option 1 would be more beneficial to the State's finances.
Hence the Government of Karnataka has decided to convey to the Government of India, its preference for Option 1," an official release from the Chief Minister's Office said.
It said this would help the State augment its revenue in the present financial year.
The CMO noted that under option 1, Karnataka would be eligible for total compensation of Rs 18,289 crore, of which Rs 6,965 crore would come from the cess collected.
For the balance of Rs 11,324 crore, the state would be able to borrow through a special window with the entire burden of principal and interest repayment being met out of compensation cess fund in the future, it said.
"Further an additional borrowing up to 1 per cent of GSDP (Rs 18,036 crore) will be available unconditionally and another 1 percent borrowing can be linked to certain reforms as earlier suggested by Government of India.
These additional borrowings may also be carried forward to the next financial year if necessary," it said.
Under option 2, the CMO said Karnataka would be eligible for a total compensation of Rs 25,508 crore, out of which Rs 6,965 crore would come from the cess collected.
The remaining amount of Rs 18,543 crore would be allowed to be borrowed through an issue of market debt.
However, in this option, unconditional borrowing of 1 per cent of GSDP (Rs 18,036 crore) will not be separately available to the state, as a result of which the net borrowing will reduce substantially by Rs 10,817 crore, it explained.
Further, under option 2, the interest on the above borrowing through issue of market debt shall be paid by the State from its own resources, it added.
Following the GST council meeting last week, the central government had written to states, suggesting options of borrowing money to make up for the Rs 2.35 lakh crore shortfall in GST revenues expected in the ongoing fiscal.
The Centre has estimated that of this amount, Rs 97,000 crore compensation requirement is due to GST roll out and the remaining is on account of the COVID-19 impact on the economy.
Giving two options, the Centre had said states can borrow either Rs 97,000 crore the deficit arising out of GST implementation or the entire Rs 2.35 lakh crore.
Several non-BJP ruled states have rejected the Centre's suggestion of states borrowing to make up for the GST shortfall, saying the constitutional liability lies with the Union government.
Home minister Basavaraj Bommai, who represented the state in the GST council, had earlier said that Karnataka has to get Rs 13,764 crore GST compensation from the Centre for the last four months and it was necessary for the state's economy.
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Violence during Ram Navami rally in Murshidabad; Muslim shops vandalised, several injured
Murshidabad: Violence broke out during a Ram Navami procession in Raghunathganj area of Jangipur subdivision, where around 40 shops were reportedly vandalised and several set on fire, raising concerns over law and order ahead of the Assembly elections.
The incident took place in Fultala locality, a predominantly Muslim residential area near the Jangipur subdivisional hospital. According to sources, tension began when a Ram Navami procession passed near a mosque while Friday prayers were underway.
Objections raised by those offering prayers reportedly led to a verbal altercation. The situation escalated as the procession moved towards Fultala crossing.
Eyewitnesses alleged that members of the mob climbed onto rooftops of nearby houses, hoisted saffron flags, damaged shops and assaulted residents. Several commercial establishments, including small shops and food outlets, were reportedly targeted.
The site of the incident is located close to the Raghunathganj police station. Residents claimed that the violence continued for some time despite the presence of police and central forces, alleging delayed intervention. Police later resorted to a lathicharge to disperse the crowd.
Among those injured was Abul Sheikh, a 30-year-old employee of Jangipur municipality, who sustained head injuries. He alleged that he was attacked while passing through the area on his motorcycle, which was also damaged and set on fire.
BJP Jangipur president Subal Chandra Ghosh said the situation arose after the procession was allegedly obstructed. He stated that participants reacted by pelting stones, leading to clashes in which people from both sides were injured.
Superintendent of Police of Jangipur police district, Surinder Singh, said police reached the spot and brought the situation under control. He said an investigation has been initiated with the involvement of both state police and central forces. No arrests had been made so far, and search operations are underway, he added.
Jangipur MLA Zakir Hossain alleged that the incident was an attempt to create communal tension ahead of elections and demanded immediate action against those responsible.
