Centre not obliged to pay for shortfall in GST compensation fund, says A-G

Says Centre not obliged to pay GST compensation shortfall; experts dislike idea of burdening states with additional debt

Attorney General K K Venugopal has offered the Centre a way out of the compensation mess under the goods and services tax (GST) system, but has not recommended borrowings by the GST Council.

He suggested that the Council can recommend to the Centre to allow states to borrow on the strength of future receipts from the compensation fund, said sources.

He also said the Centre is under no obligation to make up for the GST compensation shortfall, added sources.

Experts, however, are not enthused by the idea of burdening states with additional debt.

Pronab Sen, country director at International Growth