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

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 ₹ 10,197 crore through special borrowing window to meet the GST implementation shortfall.

Permission to raise additional ₹ 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 23^rd October, 2020 and the Government of India has already borrowed an amount of ₹ 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 23^rd October, 2020, 2^nd November, 2020, 9^th November, 2020 and 23^rd 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 17^th May, 2020. This is over and above the Special Window of ₹ 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 ₹ 4,522 crore to the State Government of Kerala (0.5% of Kerala’s GSDP) and ₹ 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)

* These States have ‘NIL’ GST compensation gap

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