The Center on Tuesday allowed 20 states to raise Rs 68,825 crore through open market loans to meet the GST revenue shortfall.
The decision came a day after the GST Council meeting failed to reach a consensus on the stalemate over the Centre’s proposal of states borrowing against future GST collections to make up for the shortfall. The compensation deficit for the current fiscal year is $ 2.35 trillion.
The Center has given two options to states in August – Rs 97,000 crore from the special window facilitated by the RBI or Rs 2.35 trillion from the market. It also proposes to expand the compensation cess levied on luxury, demerit, and sin goods by 2022 to repay loans.
The Finance Ministry on Tuesday granted permission to 20 states to raise an additional Rs 68,825 crore through open market loans.”Additional borrowing permission has been granted at the rate of 0.50 percent 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,” it said.
At the GST Council meeting on August 27, these two options were put forward and then communicated to the states on August 29.
“Twenty states have given their preferences for Option-1. These states are – 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. Eight States are yet to exercise an option,” it said.