Jharkhand has accepted the Centre’s borrowing proposal and will get Rs 1,689 crore by means of the particular window to meet the GST income shortfall, the finance ministry mentioned on Saturday.
With this, 3 union territories and all 28 states have accepted the Centre’s borrowing program to meet the shortfall in tax collection.
“ All the 28 states and 3 Union Territories with legislature have decided to go for Option-1 to meet the revenue shortfall arising out of the GST implementation. Jharkhand, the only remaining state, has now communicated its acceptance of Option-1,” the ministry mentioned in a statement.
Union Territories of Delhi, Jammu & Kashmir and Puducherry have accepted Option 1.
The states & UTs who opt for Option-1 are finding the quantity of shortfall arising out of GST implementation by means of a particular borrowing window place in spot by the Centre.
The Centre has currently borrowed Rs 30,000 crore on behalf of the states in 5 installments and has passed it on to 26 states and 3 UTs on October 23, November 2, November 9, November 23 and December 1.
From the subsequent round of borrowings, Jharkhand and Chhattisgarh also would obtain funds raised by means of this window. Earlier this week, Chhattisgarh communicated its acceptance for the borrowing program.
The subsequent installment of Rs 6,000 crore will be released to the states/UTs on December 7, 2020, the ministry added.
Under the terms of Option-1, apart from finding the facility of a particular window for borrowings to meet the income shortfall, states are also entitled to get unconditional permission to borrow the final installment of .50 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent extra borrowings permitted by the Centre.
This is more than and above the particular window of Rs 1.1 lakh crore. On receipt of the option of Option-1 from Jharkhand, the Centre has granted extra borrowing permission of Rs 1,765 crore to Jharkhand government (.5 per cent of Chhattisgarh’s GSDP), it added.
Separately, Jharkhand will get Rs 1,689 crore by means of particular borrowing window to meet the GST income shortfall.
Under the borrowing program (Option-1), the Centre would borrow from market place Rs 1.10 lakh crore which is the income shortfall on account of GST implementation. The remaining Rs 73,000 crore shortfall is estimated to be the income influence of the COVID-19 pandemic.
The second selection offered by the Centre was that the states borrow the complete Rs 1.83 lakh crore collection shortfall.
Opposition-ruled states had been initially against the borrowing program saying that the Centre should really borrow the complete GST income shortfall and compensate the states.