Kolkata: West Bengal Chief Minister Mamata Banerjee has hit out at Prime Minister Narendra Modi on the issue of GST compensation, by calling it a violation of the very premise of federalism in India.
In a letter to Modi, she said that the States were supposed to be compensated by the Centre for the shortfall of GST for five years starting 2017. But last week, Finance Minister Nirmala Sitharaman refused to compensate the amount directly through money transfer to the states and instead allowed states to borrow from the RBI.
“This is travesty and an abrogation of the fundamental basis on which the states gave up 70 per cent of their taxing powers, including the entire VAT regime, to usher in the GST regime. The only condition for giving up all of these powers was the promise of the full compensation of shortfall in GST collection for five years, on an agreed formula,” the TMC chief wrote.