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Two more States - Kerala and West Bengal choose Option-1 to meet the GST implementation shortfall

• 25 States and all Union Territories with Legislative Assembly have favoured Option-I

• Kerala and West Bengal will get Rs. 10,197 crore through special borrowing window to meet the GST implementation shortfall.

• Permission to raise additional Rs.11,309 crore through borrowings also issued to Kerala and West Bengal.

Governments of Kerala and West Bengal have communicated their acceptance of Option-1 to meet the revenue shortfall arising out of GST implementation.  The number of States who have chosen this option has gone up to 25. All the 3 Union Territories with Legislative Assembly (i.e. Delhi, Jammu & Kashmir and Puducherry) have also decided in favour of Option-1. 

The States & 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 23rd October, 2020 and the Government of India has already borrowed an amount of Rs.24,000 crore on behalf of the States in four instalments and passed it on to the States and Union Territories, who chose Option -1 on 23rd October, 2020, 2nd November, 2020, 9th November, 2020 and 23rd November, 2020. Now the State of Kerala and West Bengal will also receive funds raised through this window starting from the next round of borrowings.

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% of Gross State Domestic Product (GSDP) out of the 2% additional borrowings permitted by the Government of India, under Atmnirbhar Abhiyaan on 17th May, 2020. This is over and above the Special Window of Rs.1.1 lakh crore.  On receipt of the choice of Option-1 from the Government of Kerala and West Bengal, the Government of India has granted additional borrowing permission of Rs.4,522 crore to the State Government of Kerala (0.5% of Kerala’s GSDP) and Rs.6,787 crore to the State Government of West Bengal (0.5% of West Bengal’s GSDP) .

The amount of additional borrowing permission granted to 25 States and the amount of funds raised through special window and released to the 23 States and 3 Union Territories 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/UTs till 23.11.2020

(Rs. in Crore)

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

672.61

2

Arunachal Pradesh*

143

0.00

3

Assam

1869

289.54

4

Bihar

3231

1136.27

5

Goa

446

244.39

6

Gujarat 

8704

2683.88

7

Haryana

4293

1266.68

8

Himachal Pradesh 

877

499.74

9

Karnataka

9018

3611.17

10

Kerala #

4,522

0.00

11

Madhya Pradesh

4746

1321.98

12

Maharashtra

15394

3486.24

13

Manipur*

151

0.00

14

Meghalaya

194

32.51

15

Mizoram*

132

0.00

16

Nagaland*

157

0.00

17

Odisha

2858

1112.42

18

Rajasthan

5462

645.06

19

Sikkim*   

156

0.00

20

Tamil Nadu

9627

1816.66

21

Telangana

5017

164.41

22

Tripura

297

66.04

23

Uttar Pradesh

9703

1748.29

24

Uttarakhand

1405

674.27

25

West Bengal #

6787

0.00

Total (A):

100240

21472.16

1

Delhi

Not applicable

1706.93

2

Jammu & Kashmir

Not applicable

661.21

3

Puducherry

Not applicable

159.70

Total (B):

Not applicable

2527.84

Grand Total (A+B)

100240

24000.00

* These States have ‘NIL’ GST compensation gap

Funds will be released starting from next round of borrowing.

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