Kerala, West Bengal accept Centre's borrowing option to meet GST shortfall

New Delhi: Kerala and West Bengal have accepted the Centre's borrowing proposal and will get Rs 10,197 crore through the special window to meet GST revenue shortfall.

These are among the states that had opposed the borrowing plan.

"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," the finance ministry said in a statement.

All the 3 Union Territories with Legislative Assembly - Delhi, Jammu & Kashmir and Puducherry - have also decided in favour of Option-1, it said.

The Centre has already borrowed Rs 24,000 crore on behalf of the states in four instalments and passed it on to 23 states and 3 Union Territories on October 23, November 2, November 9 and November 23.

Now, Kerala and West Bengal will receive funds raised through this starting from the next round of borrowings, the ministry added.

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

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 Centre under Aatmanirbhar Abhiyaan. This is over and above the special window of Rs 1.1 lakh crore.

On receipt of the choice of Option-1 from Kerala and West Bengal governments, the Centre has granted additional borrowing permission of Rs 4,522 crore to Kerala and Rs 6,787 crore to West Bengal.

Other 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, Telangana, Uttar Pradesh, and Uttarakhand, besides Union Territories of Delhi, Jammu & Kashmir and Puducherry.

However, states like Punjab, Chhattisgarh and Jharkhand are yet to opt for the borrowing plan saying the Centre should borrow the entire Rs 1.83 lakh crore shortfall. Kerala and West Bengal too had opposed the borrowing plan.

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.