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Rajasthan Becomes First Cong-ruled State to Accept Centre's Borrowing Option to Meet GST Shortfall

Image for representation. (Network18 Creatives)

Image for representation. (Network18 Creatives)

With this, the state will get Rs 4,604 crore through special borrowing window and also permission to raise additional Rs 5,462 crore through borrowings,

Congress-ruled Rajasthan has accepted the Centre's borrowing proposal to meet GST revenue shortfall and will get over Rs 4,600 crore through the special window. "The Government of Rajasthan has communicated its acceptance for Option-1out of the two options suggested by the Ministry of Finance to meet the shortfall in revenue arising out of GST implementation," the Finance Ministry said in a statement.

With this, the state will get Rs 4,604 crore through special borrowing window and also permission to raise additional Rs 5,462 crore through borrowings, it added. Before Rajasthan joined in, 21 states and 3 union territories (UTs) had opted for the borrowing plan proposed by the Centre to meet the Rs 1.83 lakh crore shortfall in Goods and Services Tax (GST) collection of states.

Under the borrowing plan (Option-1), the Centre would borrow from market Rs 1.10 lakh crore to meet revenue shortfall on account of GST implementation. The remaining Rs 73,000 crore shortfall is estimated to be the revenue impact of the COVID-19 pandemic. However, states like Kerala, Punjab, West Bengal, Chattisgarh, Jharkhand are yet to opt for the borrowing plan proposed by the Centre, saying the Centre should borrow the entire Rs 1.83 lakh crore shortfall.

States 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 ministry said. The window has been operationalised now and the Government of India already borrowed an amount of Rs 12,000 crore on behalf of the states in two instalments and passed it onto21 states and 3 UTs on October 23 and November 2, 2020.

Out of this Rs 12,000 crore, Karnataka, Maharashtra and Gujarat have received Rs 1,872 crore, Rs 1,808 crore and Rs 1,391 crore, respectively. "The next instalment of borrowings is likely to be released on November 9, 2020," the ministry added.

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, 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 'AatmnirbharAbhiyaan'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-1from the Government of Rajasthan, the Government of India has granted Rajasthan additional borrowing permission of Rs 5,462 crore (0.5 per cent of Rajasthan'sGSDP).

The second option given by the Centre was for the states to borrow the entire Rs 1.83 lakh crore collection shortfall. States which 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, Rajasthan, Sikkim, Tripura, Tamil Nadu, Uttar Pradesh, and Uttarakhand, along with the three UTs ofDelhi, Jammu & Kashmir and Puducherry.


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