Earlier this week, Kerala and West Bengal too had communicated to the Centre about accepting the borrowing option to meet GST revenue shortfall.
As the thumb rule of three successive months of a phenomenon has been observed with respect to GST collections, this is a logical conclusion that may be drawn.
Congress-ruled Punjab has accepted the Centre’s borrowing proposal and will get Rs 8,359 crore through the special window to meet GST revenue shortfall. “Government of Punjab has communicated acceptance of option 1 to meet the revenue shortfall arising out of GST implementation. The number of states which have chosen this option has gone up to 26. All the 3 Union Territories with Legislative Assembly (i.e. Delhi, Jammu & Kashmir and Puducherry) have also decided in favour of option 1,” a finance ministry statement said.
The Centre has already borrowed Rs 24,000 crore on behalf of the states in four instalments and has passed it on to 23 states and three Union Territories on October 23, November 2, November 9 and November 23. From the next round of borrowings, Punjab, Kerala and West Bengal too would receive funds raised through this window. Earlier this week, Kerala and West Bengal too had communicated to the Centre about accepting the borrowing option to meet GST revenue shortfall.
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 to get unconditional permission to borrow the final instalment of 0.50 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent additional borrowings permitted by the Government of India, under ‘Aatmanirbhar Bharat’ mission.
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 Punjab, the Government of India has granted additional borrowing permission of Rs 3,033 crore to Punjab (0.5 per cent of Punjab’s GSDP), the ministry added.
Separately, Punjab will get Rs 8,359 crore through special borrowing window to meet the GST implementation shortfall. States that have opted for option 1 are – Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Punjab, Rajasthan, Sikkim, Tripura, Tamil Nadu, Telangana, Uttar Pradesh, and Uttarakhand and West Bengal, along with the three Union Territories of Delhi, Jammu & Kashmir and Puducherry.
However, states like Chattisgarh and Jharkhand are yet to opt for the borrowing plan proposed by the Centre saying the central government should borrow the entire Rs 1.83 lakh crore shortfall. Under the borrowing plan (option 1), the Centre would borrow from market Rs 1.10 lakh crore which is the revenue shortfall on account of GST implementation. The remaining
Rs 73,000 crore shortfall is estimated to be the revenue impact of the COVID-19 pandemic. The second option given by the Centre was for the states to borrow the entire Rs 1.83 lakh crore collection shortfall.