Finance

All states except Jharkhand opt for first option to meet GST compensation shortfall

Updated : December 03, 2020 07:04 PM IST

Union finance ministry has also authorised Chhattisgarh to raise additional Rs 1,792 crore through borrowings.

After months long discussions between the Centre and states to bridge the gap on GST compensation cess, the union finance ministry on Thursday said all states except Jharkhand have decided to choose option-1 to meet the GST implementation shortfall.

The latest state to agree to avail option-1 proposed by GST Council is Chhattisgarh and it will get Rs 3,109 crores through special borrowing window to meet the GST implementation shortfall, the statement said.

Union finance ministry has also authorised Chhattisgarh to raise additional Rs 1,792 crore through borrowings.

"Government of Chhattisgarh has communicated its acceptance of option-1 to meet the revenue shortfall arising out of GST implementation. The number of states who have favoured option-1 has gone up to 27. All states except Jharkhand and all the three union territories with legislative assembly have decided in favour of option-1," finance ministry statement said.

This sets aside only Jharkhand, which is yet to communicate to the Centre whether it will go ahead with option-1 or not.

Hemant Soren, chief minister of Jharkhand in the past had written to the Centre expressing concerns on the option-1 decided by the GST Council and has said it would not like to avail this option and rather expects the Centre to come back on the discussion table to find an amicable solution.

According to Centre, the states and union territories who 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 window has been operationalised since October 23, 2020 and the government of India has already borrowed an amount of Rs 30,000 crore on behalf of the states in five instalments and passed it on to the states and union territories, who chose option-1.

The funds borrowed through the special window were released to the states and UTs on October 23, 2020, November 2, 2020, November 9, 2020, November 23, 2020 and December 1, 2020. Now the state of Chhattisgarh will also receive funds raised through this window starting from the next round of borrowing.

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, the states are also entitled to get unconditional permission to borrow the final instalment of 0.50 percent of gross state domestic product (GSDP) out of the 2 percent additional borrowings permitted by the government of India, under AtmanirbharAbhiyaan 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-1, the government of India has granted additional borrowing permission of Rs 1,792 crore to Chhattisgarh (0.50 percentof Chhattisgarh’s GSDP), finance ministry said in its statement.

The amount of additional borrowing permission granted to 27 states and the amount of funds raised through special window and released to the states and union territories

Statewise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the states/UT still 02.12.2020.

S. No.	Name of State / UT	Additional borrowing of 0.50 percent allowed to States	Amount of fund raised through special window passed on to the States/ UTs
1	Andhra Pradesh	5051	804.15
2	Arunachal Pradesh*	143	0.00
3	Assam	1869	346.12
4	Bihar	3231	1358.54
5	Chhattisgarh #	1792	0.00
6	Goa	446	292.20
7	Gujarat	8704	3208.80
8	Haryana	4293	1514.40
9	Himachal Pradesh	877	597.47
10	Karnataka	9018	4317.39
11	Kerala	4,522	328.20
12	Madhya Pradesh	4746	1580.51
13	Maharashtra	15394	4167.99
14	Manipur*	151	0.00
15	Meghalaya	194	38.89
16	Mizoram*	132	0.00
17	Nagaland*	157	0.00
18	Odisha	2858	1329.97
19	Punjab	3033	475.80
20	Rajasthan	5462	907.12
21	Sikkim*	156	0.00
22	Tamil Nadu	9627	2171.90
23	Telangana	5017	299.88
24	Tripura	297	78.90
25	Uttar Pradesh	9703	2090.21
26	Uttarakhand	1405	806.10
27	West Bengal	6787	252.22
	Total (A):	105065	26966.76
1	Delhi	Not applicable	2040.77
2	Jammu & Kashmir	Not applicable	790.53
3	Puducherry	Not applicable	201.94
	Total (B):	Not applicable	3033.24
	Grand Total (A+B)	105065	30000.00

* These States have ‘NIL’ GST compensation gap

# Funds will be released starting after next round of borrowing.

All states except Jharkhand opt for first option to meet GST compensation shortfall

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