New Delhi: Even with consensus eluding the GST Council meeting on Monday over adoption of borrowing option to settle compensation dues, the Finance Ministry has granted permission to 20 states to raise an additional amount of Rs 68,825 crore through open market borrowings towards the compensation shortfall.
A Finance Ministry statement said that additional borrowing permission has been granted, at the rate of 0.50 per cent of the Gross State Domestic Product (GSDP), to those states who have opted for Option-1 out of the two options suggested by it to meet the shortfall arising out of GST implementation.
In the meeting of GST Council held on August 27, two options were put forward and were subsequently communicated to the states on August 29.
Twenty states – 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 – chose Option 1. Eight states are yet to exercise an option.
Facilities available to the states that choose Option-1 inter-alia include: a special borrowing window, coordinated by the Finance Ministry to borrow the amount of shortfall in revenue through issue of debt. The total shortfall in the revenue of the states on this account has been estimated at around Rs 1.1 lakh crore.
This option also allows states to borrow the final instalment of 0.5 per cent of GSDP out of the 2 per cent additional borrowings permitted by the government in view of the Covid pandemic, waiving the reforms condition.
