GST borrowing door opened for 20 states
The Centre on Tuesday permitted 20 states to raise additional Rs 68,825 crore through open market borrowings to bridge the revenue shortfall caused by the Covid-19 pandemic.
The decision comes a day after the GST Council meeting failed to reach a consensus on the stalemate over the Centre’s proposal of states borrowing against future GST collections to make up for the shortfall.
The projected total GST compensation shortfall in the current fiscal stands at Rs 2.35 lakh crore.
“Additional borrowing permission has been granted at the rate of 0.50 per cent of the Gross State Domestic Product (GSDP) to states that have opted for Option 1 out of the two options suggested by the ministry of finance to meet the shortfall arising out of GST implementation,” an official statement said.
In the meeting of the GST Council held on August 27 these two options were put forward and were subsequently communicated to the states on August 29.
The final instalment of 0.5 per cent out of this 2 per cent limit was linked to carrying out at least three out of four reforms stipulated by the government.
However, in case of states who have exercised Option-1, the condition of carrying out the reforms to avail the final instalment of 0.5 per cent of GSDP has been waived.
“The 20 states that have opted for Option-1 are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand. Eight states are yet to exercise an option,” it said.