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At the 42nd GST Council meeting scheduled for 5 October 2020, the minister from Assam sought continued Revenue Deficit and Devolution Grants and flexibility in conditions attached to a higher state borrowing limit. The request was about pandemic-era state finances and borrowing conditions—not a proposal to change how GST revenue is allocated to destination states.
What did the Assam minister ask for?
In the official record of the 42nd GST Council meeting, the minister from Assam asked the Centre to continue Revenue Deficit Grants and Devolution Grants. The minister also asked whether some conditions for accessing an increased borrowing limit could be relaxed. The record does not identify the speaker by personal name, so the request is best attributed to “the minister from Assam.” Official record of the 42nd GST Council meeting
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The minister said some conditions could be difficult or nearly impossible for states to meet before December 2020. The argument was that states making their best efforts should not be penalized if they could not complete every condition on time. The official record summarizes the request: “He requested for some flexibility in this regard.” In context, “this regard” means the conditions for availing the increased borrowing limit. Official record of the 42nd GST Council meeting
The example: Aadhaar coverage and ration portability
The example raised in the discussion linked Aadhaar coverage to implementation of One Nation One Ration Card. The minister’s point was that a state might face difficulty meeting a condition tied to the programme by the stated deadline, despite efforts to do so. The record presents this as the minister’s argument, not as a later Council decision or a current rule. Official record of the 42nd GST Council meeting
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Why was flexibility being discussed?
The exchange took place amid a broader discussion of falling revenues, GST compensation, borrowing options and ways to raise revenue during the pandemic. The minister from Assam also urged the Council to consider carefully whether it had authority to borrow and what consequences market borrowing might have for states. Those are views recorded in the meeting, not an independent legal determination about the Council’s borrowing powers. Official record of the 42nd GST Council meeting
The meeting record captures several approaches under discussion rather than a single settled solution:
- Continue Revenue Deficit Grants and Devolution Grants to states.
- Allow states flexibility in meeting conditions attached to an increased borrowing limit.
- Consider borrowing, including the implications of market borrowing and the question of Council-level borrowing authority.
- Consider tax-policy changes as a way to increase revenue.
These were elements of the discussion; the passage does not establish that the Council adopted the Assam minister’s requests as policy.
What does “destination state” mean in GST?
GST is destination-based: broadly, tax revenue is associated with the place where goods or services are consumed rather than only where they originate. The Assam Finance Department describes GST as combining a number of central and state taxes and allowing set-off of taxes paid at earlier stages. Its overview lists a review date of 10 September 2026. Assam Finance Department overview of GST
Earlier GST Council minutes discuss how origin- and destination-state flows can affect public finances. They note that an unconditional reimbursement to a supplier in an origin state could create a double outflow: tax transferred to the destination state and reimbursement paid by the origin state. That is useful background on the sensitivity of GST design, but it is a separate issue from the 2020 Assam request to relax borrowing conditions. Earlier GST Council minutes on destination-based tax flows
Was Assam asking to change destination-state tax allocation?
Not in the recorded remarks covered here. The minister’s request concerned grants and conditions attached to a higher state borrowing limit. The destination-based principle helps explain GST’s inter-state fiscal context, but the official passage does not connect the flexibility request to changing the allocation of tax between origin and destination states.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the official record does—and does not—establish
- It records the remarks in materials for the 42nd GST Council meeting, scheduled for 5 October 2020.
- It identifies the speaker only as the minister from Assam; it does not provide the person’s name in the relevant passage.
- It records a request for continued grants and flexibility, along with the Aadhaar and One Nation One Ration Card example.
- It records the minister’s concerns about borrowing authority and market-borrowing consequences as the minister’s views, not as a legal finding.
- It does not establish that the requested flexibility became a current or continuing policy.
The meeting record also says: “In cases where, despite best efforts, if some of the conditionalities are not implemented, the States may not be penalized for that and may be next year they will fulfill all the conditions.” This is the wording in the 2020 record, not evidence of a separately verified present-day policy. Official record of the 42nd GST Council meeting
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