All states have taken the Rs 1.1 lakh crore option to meet the shortfall from goods and services tax (GST) implementation, the finance ministry said on Saturday. With Jharkhand, the last state to take the option, the issue that had become a home of contention between Centre and states now stands resolved.
Jharkhand will get Rs. 1,689 crore through special borrowing window and will be allowed to raise an additional Rs. 1,765 crore through borrowings upto 0.5% of the state’s gross domestic product.
The government has already borrowed Rs.30,000 crore on behalf of the states in five instalments and passed it on to the states. Jharkhand will get the funds in the next installment of Rs 6,000 crore is due December 7.
The Centre had offered to all states two options – Rs 97,000 crore and Rs 2.35 lakh crore – with different sets of conditions for each to meet the GST compensation shortfall. It had sweetened the first option by increasing the borrowing limit to Rs 1.1 lakh crore and agreed to borrow the amount and transfer to the states as loans on a back-to-back basis.
The second option was taken off the table.
Jharkhand, Chhattisgarh, Punjab, West Bengal and Kerala which had earlier decided not to take any of the borrowing options, have now come on board. The Centre will continue issuing the funds in weekly tranches through a special window coordinated by the finance ministry. The amount of additional borrowing permission granted to all states stands at Rs 1,06,830 crore.
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