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Saturday, November 28, 2020

Rajasthan picks Option 1 to meet GST shortfall

With Rajasthan joining in, 22 states and 3 UTs have opted for the borrowing plan proposed by the Centre to meet the `1.83 lakh crore shortfall. Kerala, Punjab, West Bengal, Chhattisgarh, Jharkhand are yet to pick their option.

By: ENS Economic Bureau | New Delhi | November 6, 2020 3:44:28 am
Rajasthan will get Rs 4,604 crore via the special window and the funds through the back-to-back loan will be made available to the state soon.

After Puducherry opted for borrowing under the RBI-facilitated special window earlier this week, Rajasthan on Thursday became the latest opposition-ruled state to choose the borrowing Option 1 to meet the compensation shortfall under Goods and Services Tax (GST) regime, the Finance Ministry said.

Rajasthan will get Rs 4,604 crore via the special window and the funds through the back-to-back loan will be made available to the state soon. “The Government of Rajasthan has communicated its acceptance for Option 1 out 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 release.

With Rajasthan joining in, 22 states and 3 union territories (UTs) have opted for the borrowing plan proposed by the Centre to meet the Rs 1.83 lakh crore shortfall in GST revenue. Kerala, Punjab, West Bengal, Chhattisgarh, Jharkhand are yet to pick their borrowing plan, saying that the central government should borrow the entire Rs 1.83 lakh crore shortfall.

Under the special window, the Centre has already borrowed an amount of Rs 12,000 crore in two instalments and passed it on to 21 states and 3 UTs on October 23 and November 2. Of this amount, 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 Finance Ministry said.

The ministry had last month said that the Centre would borrow from the market and then act as an intermediary to arrange back-to-back loans to pay the GST compensation shortfall of Rs 1.1 lakh crore to state governments.

In August, the Centre gave two options to states — either borrow Rs 97,000 crore from a special window facilitated by the Reserve Bank of India or borrow Rs 2.35 lakh crore from the market. The options have since been revised to Rs 1.10 lakh crore and Rs 1.8 lakh crore, respectively.

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