Centre communicates borrowing options to settle GST compensation to States

Agencies
August 29, 2020

New Delhi, Aug 29: States will have to forego borrowing flexibility of 1% of state GDP given under the Atmanirbhar Bharat package if they opt to settle their entire GST compensation shortfall for FY21 through market borrowings.

As per the design of the options given to the states by the Centre to meet GST compensation gap, if the states decide to meet the entire shortfall of Rs 235,000 crores (including the COVID-impact portion) through issue of market debt, then additional unconditional borrowing limit of 0.5% and the final (bonus) tranche of 0.5% provided under the Atmanirbhar Bharat package as a COVID relief measure will not be available separately.

The finance ministry, which gave two options to states at the GST council meeting on August 27 to cover the GST compensation shortfall this year, on Saturday sent a written communication on the two borrowing options to States who have been given seven days time to revert with their preference on the proposals. A meeting of State Finance Secretaries with the Union Finance Secretary and Secretary (Expenditure) has also been scheduled on September 1 for clarifying issues.

Under option one, the Centre has offered a special borrowing window to states, in consultation with the RBI, for an amount of Rs 97,000 crore (the shortfall arising out of GST implementation) at a "reasonable" interest rate.

The Centre will endeavour to keep the borrowing cost at or close to the G-sec yield, and in the event of the cost being higher, will bear the margin between G-secs and the average of State Development Loan yields up to 0.5% (50 basis points) through a subsidy.

The borrowing under the first option will also not be treated as debt of the state and can be availed over and above any other borrowing ceilings eligible under any other normal or special permission notified by the Department of Expenditure.

Also, under option one, the interest on the borrowing will be paid from the Cess as and when it arises until the end of the transition period. After the transition period, principal and interest will also be paid from the proceeds of the Cess, by extending the Cess beyond the transition period for such period as may be required. The state will not be required to service the debt or to repay it from any other source.

Moreover, in this option the state would also be permitted to avail full additional borrowing limits given under the Atmanirbhar Bharat package with the last 0.5 per cent bonus also being given unconditionally. Unused borrowing could also be carried forward to the next year by the states.

Under the Atmanirbhar Bharat package states allowed unconditional additional borrowing of 0.5 per cent of SGDP (over and above 3 per cent allowed) performance or reforms linked borrowing of 1 per cent in four reaches of 0.25 per cent each and additional 0.5 per cent borrowing on completing three out of four reforms.

The second option given by the centre allows states to borrow entire projected GST compensation shortfall of Rs 2,35,000 crore (total shortfall of Rs 3 lakh crore minus Rs 65,000 crore collected as GST compensation cess) for FY21. But this borrowing will be allowed by subsuming the additional unconditional borrowing limit of 0.5% and the final (bonus) tranche of 0.5% given to states as a special limit to fight the COVID pandemic.

Though reform linked borrowing will be permitted under this option, it would not be carried forward to next year. The interest on borrowing taken by states under this option will have to be paid by them from their resources. The principal on the amount borrowed under the option, after the transition period, will be paid from the proceeds of the Cess. The States will not be required to repay the principal from any other source.

Also, To the extent of the shortfall arising due to implementation of GST (i.e. Rs. 97,000 crores approximately in aggregate) the borrowing will not be treated as debt of the State for any norms which may be prescribed by the Finance Commission.

The Compensation Cess will be continued after the transition period until such time as all arrears of compensation for the transition period are paid to the states. The first charge on the future Cess would be the principal repayment. The remaining arrears of compensation accrued during the transition period would be paid after the principal is paid.

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News Network
November 13,2024

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New Delhi: The Supreme Court took a firm stance on ‘bulldozer justice’ today, affirming that the Executive cannot bypass the Judiciary and that the legal process must not prejudge the guilt of an accused. In a significant judgment, the bench led by Justices BR Gavai and KV Viswanathan set new guidelines for demolition practices, responding to petitions challenging the controversial bulldozer actions taken against individuals accused of crimes.

The rise of this practice, termed 'bulldozer justice,' has seen authorities in various states demolish what they claim to be illegal structures belonging to accused individuals. However, multiple petitions questioned the legality and fairness of this approach, bringing the matter before the court.

Justice Gavai highlighted that owning a home is a cherished goal for many families, and an essential question was whether the Executive should have the authority to strip individuals of their shelter. “In a democracy, the rule of law protects citizens from arbitrary actions by the state. The criminal justice system must not assume guilt,” stated the bench, underscoring that due process is a fundamental right under the Constitution.

On the principle of separation of powers, the bench reinforced that the Judiciary alone holds adjudicatory powers and that the Executive cannot overstep these boundaries. Justice Gavai remarked, “When the state demolishes a home purely because its resident is accused of a crime, it violates the doctrine of separation of powers.”

The court issued a strong warning about accountability, stating that public officials who misuse their power or act arbitrarily must face consequences. Justice Gavai observed that selectively demolishing one property while ignoring similar cases suggests that the aim might be to penalize rather than enforce legality. “For most citizens, a house is the product of years of labor and dreams. Taking it away must be an action of last resort, thoroughly justified,” he said.

In its directives under Article 142 of the Constitution, the Supreme Court established new demolition guidelines. These include:

Mandatory Show-Cause Notice: No demolition should occur without first issuing a show-cause notice. The person served has a minimum of 15 days or the duration stated in local laws to respond.

Transparency of Notice Content: The notice must include specifics about the alleged unauthorized construction, the nature of the violation, and the rationale for demolition.

Hearing and Final Order: Authorities are required to hear the response of the affected individual before issuing a final order. The homeowner will have 15 days to address the issue, with demolition proceeding only if no stay order is obtained from an appellate authority.

Contempt Proceedings: Any breach of these guidelines would lead to contempt proceedings. Officials who disregard these norms will be personally accountable for restitution, with costs deducted from their salaries.

Additionally, the court mandated that all municipal bodies establish digital portals within three months, displaying show-cause notices and final orders on unauthorized structures to ensure public transparency and accountability.

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News Network
November 21,2024

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After the US prosecutors charged Gautam Adani with bribery and fraud, Congress reiterated its call for a Joint Parliamentary Committee (JPC) probe into the transactions of the Adani group, and hit out at Prime Minister Narendra Modi, alleging an "internal nexus" between him and "his favourite businessman."

Senior Congress leader Jairam Ramesh said the indictment of Gautam Adani and others by the US Securities and Exchange Commission validates his party’s call for a Joint Parliamentary Committee investigation.

The Congress has been pushing for the probe since January 2023, raising concerns over alleged irregularities involving Adani and his business dealings, said Ramesh.

Ramesh referred to the party’s “Hum Adani ke Hain” series, where 100 questions were raised about the alleged scams and the links between Prime Minister Narendra Modi and Gautam Adani.
He noted that the questions remain unanswered, reiterating the need for accountability in the matter.

The US prosecutors have charged Adani with deceiving investors by concealing information about his firm's solar energy project in India, which allegedly involved bribery.

Adani has been charged with securities fraud and conspiracy, according to an indictment unsealed on Wednesday. The case focusses on an agreement between Adani Green Energy Ltd. and another organisation to supply 12 gigawatts of solar power to the Indian government.

'BETRAYAL OF INDIAN INVESTORS'

Congress leader Pawan Khera described the allegations against Gautam Adani and his conglomerate as a “betrayal of Indian investors.”

Taking to X, Khera outlined the US charges, including claims that Adani’s group bribed Indian government officials between 2020 and 2024 to secure contracts. Citing media reports, he also pointed out that Gautam Adani personally met a government official to advance the scheme.

Khera referred to a March 2024 incident where the Adani Group allegedly misled the Bombay Stock Exchange and the National Stock Exchange, calling it a “grave violation of investor trust.”

He further highlighted a March 2023 FBI raid on the premises of Sagar Adani, Gautam Adani’s nephew, where electronic devices were seized as part of the investigation.

'SEBI NOT ABLE TO PROVE ANY CHARGES AGAINST ADANI'

Shiv Sena (UBT) leader Priyanka Chaturvedi criticised central probe agencies following US charges against Gautam Adani and others in an alleged bribery case linked to solar energy contracts.

Chaturvedi raised concerns about corporate governance and regulatory oversight in the country. “They talk about corporate governance, responsibility, and accountability. The industrialists should be asked to follow the rules and regulations, but even the agencies were defending him. The SEBI has not yet been able to prove charges against him,” she said, pointing to what she viewed as failures in ensuring accountability.

'BROUGHT DISREPUTE TO INDIA'

On US charges against Gautam Adani, AAP leader Sanjay Singh called for a probe against the industrialist. He said that the probe should be conducted by an investigation agency under the Supreme Court.

"Adani Group has brought disrepute to India. This is a very serious matter. The PM of India should come forward and answer this. All the pending matters against Adani should be probed by an investigation agency under Supreme Court monitoring, and all the corruption done by him, within and outside the country, should come out before the country and action should be taken against him," he said.

BJP DFENDS

BJP IT cell chief Amit Malviya responded sharply to the Opposition’s criticism regarding allegations involving Adani Green Energy and US-based Azure Power. He pointed out that the charges in the indictment are only allegations and emphasised, “The defendants are presumed innocent unless and until proven guilty.”

Malviya argued that the crux of the case concerns agreements to supply 12 GW of power to the Solar Energy Corporation of India (SECI), contingent on SECI securing power purchase agreements with state electricity distribution companies (SDCs).

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News Network
November 15,2024

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Union minister Amit Shah on Friday, November 15, said PM Narendra Modi will amend the Waqf Act despite opposition from leaders like Uddhav Thackeray and Sharad Pawar.

"Modi ji wants to change the Waqf Board law, but Uddhav ji, Sharad Pawar and Supriya Sule are opposing it," Shah said, addressing a rally at Umarkhed in Maharashtra's Yavatmal district.

"Uddhav ji, listen carefully, you all can protest as much as you want, but Modi ji will amend the Waqf Act," he said. Shah said there are two camps in the November 20 Maharashtra assembly polls, one of 'Pandavas' represented by the BJP-led Mahayuti and the other of 'Kauravas' represented by Maha Vikas Aghadi.

"Uddhav Thackeray claims that his Shiv Sena is the real one. Can the real Shiv Sena go against renaming Aurangabad to Sambhajinagar? Can the real Shiv Sena go against renaming Ahmednagar to Ahilyanagar? The real Shiv Sena stands with the BJP," Shah said.

"Rahul Baba used to say that his government would credit money in the accounts of the people instantly. You were unable to fulfil your promises in Himachal, Karnataka, and Telangana," he said.

Shah said the Mahayuti alliance has promised that women will get Rs 2,100 per month under the Ladki Bahin Yojana. "Kashmir is an integral part of India and no power in the world can snatch it away from us," Shah said.

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