Opposition-ruled states will seek Prime Minister Narendra Modi’s intervention on the issue of compensation for goods and services tax shortfall, unhappy with the offer of two lending options of St. Andhra Pradesh, Tamil Nadu, and Odisha are likely to join Delhi, Punjab, Kerala, West Bengal, Chhattisgarh, Jharkhand, Maharashtra, Rajasthan, and Puducherry, instead of rejecting options and borrowing from the Center and giving compensation to states for.

“At least a dozen Chief Ministers will personally write to the Prime Minister … A letter will be sent to Kerala tomorrow,” Kerala Finance Minister Thomas Issac told ET that the opposition-led and allied states met through videoconferencing and collectively decided that they would not borrow.

He said Andhra Pradesh, Tamil Nadu, and Odisha had created a strong position in the council (opposing the proposals) … We hope they will also join it. States will hold further talks after the meeting of the Finance Secretary and Expenditure Secretary on Tuesday to clarify the proposals of the Center. One of the options presented on Thursday was due to changes in the GST regime, allowing states to take a loan of Rs 97,000 crore from the facility of a special central bank, including repayment of principal and interest for compensation cess.

The alternative is to borrow Rs 2.35 lakh crore, a projected shortfall due to GST transition from the market and Covid-19 induced slowdown, facilitated by the Center and RBI. However, states would have to bear the burden of interest, while the chief would be served by the indemnity cess imposed on specified categories of sins and luxury products such as cigarettes and automobiles.

“It is necessary to take a loan from the market and it is administratively difficult to implement and more expensive. Further, the reasons cited for such an arrangement cannot be accepted,” he said, making unpaid dues of Rs 12,250. demanded.

State Chief Minister Bhupesh Baghel asked Sitharaman to pay the remaining Rs 2,828 crore in the state.

Punjab sought clarity on several matters, including Attorney General KK Venugopal’s opinion on the compensation cess provided to the states based on insufficient information.

Without amendments to the GST Compensation Act, Badal has questioned the reduction in compensation as it cannot be increased or reduced.

The Act and the Center’s suggestions to allow states to take loans were contrary to each other, Badal said, as per the Act, all resources are first deposited in the Compensation Fund and then disbursed to the States.

“How can money borrowed by a state be deposited in the Compensation Fund?” He asked.

Badal sought clarity on the calculation of compensation for the period after January 2021, especially since it was not clear when the impact of Covid-19 would end.

Badal questioned on what basis the losses due to GST implementation were calculated – a 10% increase over the previous year and the remainder attributed to the Covid-19 epidemic – especially when revenue growth in FY15 was 4% But in the fourth quarter the GDP growth rate was slow.