The Centre is reducing the compensation cess shortfall for this fiscal year to Rs 1.83 lakh crore from Rs 2.35 lakh crore earlier. The cut arises because the government intends to roll over the amount for February and March next year to 2021-22.

Therefore, the borrowing option 2 before the states at their October 12 meeting will be the reduced sum of Rs 1.83 lakh crore. The Centre had earlier raised the borrowing option 1 to Rs 1.10 lakh crore from Rs 97 lakh crore.

The Centre has already indicated that there will be no vote at the GST Council next week since the borrowing by states does not come within the ambit of the Council’s jurisdiction.

The initial sum of Rs 97,000 crore under the first borrowing option was based on the assumption of 10 per cent growth in GST receipts in 2019-20.

The Centre was forced to raise the sum to Rs 1.10 lakh crore as some of the states had argued the growth in receipts was 6 per cent to 7 per cent in 2018-19 and 2019-20. The growth this fiscal would be lower still, meaning the shortfall would be higher at Rs 1.10 lakh crore.

Analysts said the changes in the borrowing numbers indicate the Centre plans to come up with some strategy to push through its plans.

After the last GST Council meeting on Monday, finance minister Nirmala Sitharaman had said that some of the BJP-ruled states such as Assam, Goa, Karnataka and Bihar have pushed for a quick decision as they wanted to borrow at the earliest to meet their revenue shortfall.

With the 10 Opposition-ruled states against both the borrowing options, the GST Council meeting next week is expected to see some fireworks. Kerala finance minister Thomas Isaac has said the states will have no choice but to move the Supreme Court if the Centre tries to push the first borrowing option.

Since the Centre has refused to set up a dispute resolution mechanism, a petition before the apex court is the only way out. Article 279A (11) of the Constitution states the GST Council can create a mechanism to resolve disputes between the central government and states or among two or more states.

Chhattisgarh minister T.S. Singh Deo in a tweet has said “the rightful GST compensation of states is being denied by the central govt and it is forcing undemocratic borrowing to deal with the shortfall. The utter mismanagement from the Centre has led to this fiasco and Centre should take responsibility”.

“We will seek a decision by consensus regarding the borrowing option for the GST compensation in the upcoming meeting on October 12. If consensus cannot be reached then a division may be sought to resolve it through democratic ways,” the Congress leader tweeted.