20 states allowed to mobilise Rs 68,825 Cr to meet GST revenue shortfall
DIMAPUR, OCTOBER 13 (MExN): The Central Government has allowed Nagaland State to borrow an additional amount of Rs 157 Crores in order to meet its GST shortfall.
Nagaland was among the 20 states permitted by the Ministry of Finance on Tuesday to raise Rs 68,825 crore through borrowings to meet the GST revenue shortfall. This comes a day after the Goods and Services Tax (GST) Council meet on Monday ended without reaching a consensus on compensating states.
Additional borrowing permission has been granted at 0.50% of the Gross State Domestic Product (GSDP) to those states who 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.
In the meeting of GST Council, which was held on 27 August this year, these two options were put forward and were subsequently communicated to the States on 29 August.
Twenty states have given their preferences for Option-1. These states include - 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. However, eight states are yet to exercise an option.
The facilities available to the states who choose Option-1 inter-alia include a special borrowing window, coordinated by the Ministry of Finance 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 ₹1.1 lakh crore.
It also includes permission to borrow the final instalment of 0.5% of GSDP out of the 2% additional borrowings permitted by the Government of India in view of the COVID pandemic, waiving the reforms condition.
Earlier on 17 May, the Department of Expenditure had provided additional borrowing limit of up to 2% of GSDP to the states. The final instalment of 0.5% out of this 2% limit was linked to carrying out at least three out of four reforms stipulated by the Government of India.
However, in case of states who have exercised Option-1, to meet the shortfall arising out of GST implementation, the condition of carrying out the reforms to avail the final instalment of 0.5% of GSDP has been waived.
Thus, the 20 states, who have exercised Option-1, have become eligible to raise an amount of ₹68,825 crore through open market borrowings. Action on the special borrowing window is being taken separately.
Meanwhile there seems to be no consensus arrived at among states.
The Centre and dissenting states on October 12 failed to reconcile their differences over the GST compensation issue in a dedicated meeting of the federal body held via video conferencing, at a time most states are starving for funds in view of the Covid-19 pandemic.
No consensus has been arrived at on way to make up for GST shortfall of states, said Sitharaman after the meeting concluded. Sitharaman also said the government will facilitate 21 states who want to borrow to meeting gap in GST compensation.
“There is no unanimity but that does not mean there is a dispute. (GST compensation) cess has been extended beyond five years. If (many) states are willing to borrow, we will facilitate. I don’t expect a dispute," Sitharaman said.
