Need fresh option on GST through debate, says Kerala Finance Minister Thomas Isaac

The ongoing row in the GST Council meetings over GST compensation seems to be causing fresh cracks in Centre-State relationship.

Kerala Finance Minister Thomas Isaac told Arjun Raghunath of DH that the only solution is to evolve a fresh option through deliberations and not through confrontation. Excerpts from the interview:

Has the ongoing row over GST affected Centre-State relationship?

Over the years, it has been generally a collaborative exercise that has been going on in the GST Council. The council needs to take decision by consensus... The functioning of the GST council over the last few years is not on these lines. The states were being pressurised to choose the options the Centre prescribed.

Do you think that politics is the reason behind the present stalemate?

If you review the stands taken by many states during the previous council meetings, you can see that many states that are now favouring the Centre’s options, had differences earlier. Their concerns were reflected in their speeches. But later when the Centre came up with two options, the BJP-ruled states backed it. Hence, it is quite obvious that the BJP-ruled states were just falling in line with BJP’s opinion.

Can the GST Council be insulated from the political intervention?

I don’t think so. All members of the council are representatives of political parties. Hence, political interests are quite inevitable... However, there is a certain way in which decisions are made. Opinions raised by all states have to be accommodated...

Is the opposition of states like Kerala also due to political interests?

The last GST Council meeting (on October 5) lasted for about eight hours. Ten states, including Kerala, clarified their stand and practical aspects. Finally, the revenue secretary said that the discussions were over. Then we insisted that the council’s decision should be taken in the council itself. Decisions taken by the Centre could not be seen as that of the council, and should not be imposed on the states.

How do you justify your stand that the Centre should borrow?

It is much easier for the Centre to borrow than the states. They can borrow at easy terms and may even be able to borrow without interest from the RBI. The borrowing limits of the Centre is also high.

What is the solution to this stalemate?

A fresh option could be evolved through deliberations. The Centre and the states should move back from their earlier options. The borrowing for GST compensation should not be made part of the borrowing limits of the government.