The Department of Expenditure in the Ministry of Finance on Tuesday granted permission to 20 States to raise an additional amount of 68 thousand 8 hundred 25 crore rupees through open market borrowings.
The Ministry of Finance said, additional borrowing permission has been granted at 0.50 per cent of the Gross State Domestic Product, GSDP to those States who have opted for Option- 1 out of the two options suggested by the Ministry to meet the shortfall arising out of GST implementation.
In the meeting of GST Council held on 27th August this year, these two options were put forward and were subsequently communicated to the States on 29th August. Twenty States have given their preferences for Option-1. These States are – Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand. Eight States are yet to exercise an option.
The facilities available to the States who choose Option-1 include a special borrowing window, coordinated by the Ministry of Finance to borrow the amount of shortfall in revenue through issue of debt. The total shortfall in the revenue of the States on this account has been estimated at around 1.1 lakh crore rupees. Permission to borrow the final installment of 0.5 per cent of GSDP out of the 2 per cent additional borrowings permitted by the Government of India in view of the COVID pandemic, waiving the reforms condition.
The Department of Expenditure, on 17th May this year, had provided an additional borrowing limit of upto 2 per cent of GSDP to the States. The final installment of 0.5 per cent out of this 2 per cent limit was linked to carrying out at least three out of four reforms stipulated by the Government of India.
However, in case of States who have exercised Option-1, to meet the shortfall arising out of GST implementation, the condition of carrying out the reforms to avail the final installment of 0.5 per cent of GSDP has been waived. The 20 States, who have exercised Option-1, have become eligible to raise an amount of 68 thousand 8 hundred 25 crore rupees through open market borrowings. The Ministry of Finance said, action on the special borrowing window is being taken separately.