NEW DELHI: A day after the GST Council meeting failed to arrive at a consensus on how to bridge the GST revenue shortfall, the Centre on Tuesday allowed 20 states to raise Rs 68,825 crore through open market borrowings. These states had agreed with the first option given by the Centre to borrow money under a special RBI window.
The 20 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.
“Additional borrowing permission has been granted at the rate of 0.50% of the Gross State Domestic Product to those States that have opted for Option 1,” a statement from the finance ministry read. At the press meet on Monday after the inconclusive GST Council meeting, Finance Minister Nirmala Sitharaman had said, “Just because there is no consensus, it does not mean no decision can be taken.” Eight states are yet to exercise either of the two options mooted by the Centre.
The finance ministry statement said, “Action on the special borrowing window is being taken separately”, which means the government is no mood to negotiate any further on the issue. The finance ministry had on May 17 provided additional borrowing limit of up to 2% of GSDP to the states. The final instalment of 0.5% (out of the 2% limit) was linked to carrying out three out of the four reforms stipulated by the Centre.
However, to sweeten the deal, the Centre said it will waive the reform conditions in the final instalment in view of the Covid pandemic. Officials said states that haven’t opted any option mooted by the Centre will get their share from the cess. But, if there is shortfall, it will be carried over to the next year.
Will move SC: Kerala fm
Kerala FM Thomas Isaac said nine states will jointly approach the SC if the Centre insists that states borrow up to `1.1 lakh crore as compensation on account of GST implementation