All states, except Jharkhand, 3 UTs choose option-1 to meet GST revenue shortfall
Dec 03, 2020
New Delhi [India], December 3 : The central government on Thursday said that all states except Jharkhand and three union territories with legislative assemblies have chosen option-1 to meet the revenue shortfall arising out of GST implementation.
Ministry of Finance said in a release that Chhattisgarh government has communicated its acceptance of Option-1 to meet the revenue shortfall.
"The states and Union Territories which choose Option-1 are getting the amount of shortfall arising out of GST implementation through a special borrowing window put in place by the Government of India. The window has been operationalised since October 23, 2020, and the Government of India has already borrowed an amount of Rs 30,000 crore on behalf of the states in five instalments and passed it on to the States and Union Territories, which chose Option-1," said the release.
Notably, the funds borrowed through the special window were released to the states and UTs on October 23, 2020, November 2, 2020, November 9, 2020, November 23, 2020, and December 1, 2020.
"Now the State of Chhattisgarh will also receive funds raised through this window starting from the next round of borrowing," the government said.
The Ministry said under the terms of Option-1, besides getting the facility of a special window for borrowings to meet the shortfall arising out of GST implementation, the States are also entitled to get unconditional permission to borrow the final instalment of 0.50 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent additional borrowings permitted by the Government of India, under Atmanirbhar 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 1,792 crore to the State Government of Chhattisgarh (0.50 per cent of Chhattisgarh's GSDP)," it said further.
The amount of additional borrowing permission granted to 27 States is Rs 1,05,065 crore, and the amount of funds raised through the special window and released to the States is Rs 26966.76 crore, and Union Territories is Rs 3033.24 crore.
On August 27, 2020, the GST Council in its 41st meeting had decided to give its member states two borrowing options to meet their compensation shortfall and a response time of seven working days from the formal receipt of the detailed proposal on options by email.
Option 1 offered the states to borrow the shortfall arising out of GST implementation, estimated at Rs 97,000 crores approximately to be borrowed through the issue of debt under a special window coordinated by the Ministry of Finance. The option is to ensure a steady flow of resources similar to the flow under GST compensation on a bi-monthly basis.
Option 2 has offered the states to borrow the entire compensation shortfall of Rs 2.35 lakh crore (including the COVID-impact portion) through the issue of market debt.
