Rajasthan decides to go for Option-1 to meet the GST implementation shortfall



Quick Summary
The Rajasthan government has chosen Option-1 to address the revenue shortfall caused by GST implementation. This decision allows the state to receive funds through a special borrowing window facilitated by the central government, totalling Rs. 4,604 Crores. Additionally, Rajasthan has been granted permission to borrow an extra Rs. 5,462 Crores, equivalent to 0.5% of its GSDP, under the Atmanirbhar Abhiyaan initiative.

State will get Rs.4,604 Crores through special borrowing window and also permission to raise additional Rs.5,462 Crores through borrowings

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 State has now joined 21 other States and 3 Union Territories (Delhi, Jammu & Kashmir and Puducherry) who have opted for Option-1.

The States 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 now and the Government of India already borrowed an amount of Rs.12,000 crores on behalf of the States in two instalments and has passed it on to 21 States and 3 Union Territories on 23 rd October, 2020 and 2 nd November, 2020. Now the Government of Rajasthan will receive funds raised through this window. The next instalment of borrowings is likely to be released on 9 th November, 2020.

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 toget unconditional permission to borrow the final instalment of 0.50% of Gross State Domestic Product (GSDP) out of the 2% additional borrowings permitted by the Government of India, under AtmnirbharAbhiyaan on 17th May, 2020. This is over and above the Special Window of Rs.1.1 lakh crores.On receipt of the choice of Option-1from the Government of Rajasthan, the Government of India has today granted the State Government of Rajasthan additional borrowing permission of Rs.5,462 crores (0.5% of Rajasthan’s GSDP).

States who 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 Union Territories of Delhi, Jammu & Kashmir and Puducherry. The amount of additional borrowing permission granted to these States and the amount of funds raised through special window and released to the 21 States and 3 UTs so far is annexed.

State wise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the States till 05.11.2020

(Rs. in Crore)

S. No.

Name of State / UT

Additional borrowing of 0.50 percent allowed to States

Amount of fund raised thrugh special window passed on to the States/ UTs

1

Andhra Pradesh

5051

348.81

2

Arunachal Pradesh*

143

0.00

3

Assam

1869

150.27

4

Bihar

3231

589.15

5

Goa

446

126.70

6

Gujarat

8704

1391.78

7

Haryana

4293

656.93

8

Himachal Pradesh

877

259.18

9

Karnataka

9018

1872.84

10

Madhya Pradesh

4746

685.60

11

Maharashtra

15394

1808.14

12

Manipur*

151

0.00

13

Meghalaya

194

16.81

14

Mizoram*

132

0.00

15

Nagaland*

157

0.00

16

Odisha

2858

576.92

17

Rajasthan

5462

0.00

18

Sikkim*

156

0.00

19

Tamil Nadu

9627

942.24

20

Tripura

297

34.38

21

Uttar Pradesh

9703

906.66

22

Uttarakhand

1405

349.78

 

Total:

83914

10716.19

1

Delhi

0.00

885.19

2

Jammu & Kashmir

0.00

342.88

3

Puducherry

0.00

55.74

 

Total:

0.00

1283.81

 

Grand Total

83914

12000.00

* These States have ‘NIL’ GST compensation gap

FAQ :

Option-1 allows states to receive funds for their GST revenue shortfall through a special borrowing window set up by the Government of India.

Rajasthan will receive Rs. 4,604 Crores through the special borrowing window and an additional Rs. 5,462 Crores in borrowing permission.

States opting for Option-1 also get unconditional permission to borrow an additional 0.50% of their Gross State Domestic Product (GSDP) under the Atmanirbhar Abhiyaan.

Rajasthan joins 21 other states and 3 Union Territories (Delhi, Jammu & Kashmir, and Puducherry) that have already opted for Option-1.

The Government of India has already borrowed funds in instalments for other states and the next instalment, which Rajasthan will receive, is expected around 9th November 2020.




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Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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