All states accept Rs 1.1 lakh crore borrowing option to meet GST shortfall
All states and Union territories have decided to go for the first option given by the Centre to meet the revenue shortfall arising out of the Goods and Services Tax (GST) implementation with Jharkhand becoming the latest state to join the list, the government said on Saturday.
Under the terms of Option-1, states and Union territories will get the facility of a special window for borrowings to meet the shortfall arising out of GST implementation and are entitled to get unconditional permission to borrow the final instalment of 0.50% of Gross State Domestic Product (GSDP) out of the 2% additional borrowings permitted by the government under Aatmanirbhar Abhiyaan on May 17, 2020. “This is over and above the special window of Rs.1.1 lakh crore. On receipt of the choice of Option-1, the Government of India has granted additional borrowing permission of Rs.1,765 crore to the State Government of Jharkhand (0.50 % of Jharkhand’s GSDP),” the finance ministry said in a statement.
The amount of additional borrowing permission granted to 28 states and the amount of funds raised through the special window and released to the states and Union territories so far is annexed, according to the statement.
What is the special borrowing window?
The government has set up a special borrowing window for the states and UTs who choose Option-1 to borrow the amount of shortfall arising out of GST implementation. The window has been operational since October 23, 2020, and the government has already borrowed an amount of Rs 30,000 crore on behalf of the states in five instalments and passed it onto the states and UTs, who chose Option-1.
Now, Jharkhand will also receive funds raised through this window starting from the next round of borrowing. The next instalment of Rs 6,000 crore will be released to the states and Union territories on December 7, 2020.