GST shortfall: UP weighs pros and cons of borrowing options

LUCKNOW The Uttar Pradesh government is looking into two borrowing options offered by the Centre to meet the shortfall in Goods and Services Tax (GST) collections.

A high-level meeting was held here on Monday to decide on the issue. Although no final decision was taken, a majority opinion was in favour of exercising the first of the two options on the table, those aware of the matter said.

Chief minister Yogi Adityanath, who chaired the Monday meeting, is expected to hold another round before taking a final call. The Centre had given the states a week’s time to firm up their decision.

Those who attended the Monday meeting included finance minister Suresh Khanna, chief secretary RK Tiwari, additional chief secretary (finance) Sanjiv Mittal, additional chief secretary (commercial tax) Alok Sinha and commercial tax commissioner Amrita Soni, among others.

“At today’s meeting, we weighed the pros and cons of both the borrowing options as offered by the Centre and will choose the one that is best suited to the interests of the state,” chief secretary RK Tiwari said.

“We will take the final decision very soon and before the GST Council meeting on September 19,” he added.

At the last GST Council meeting on August 27, the Centre offered two borrowing options to states. According to one option, states can borrow the full compensation deficit of Rs 2.35 lakh crore, which includes the loss due to transition to GST and also the Covid-led slowdown, from the markets, facilitated by the Centre and the RBI. The other option is that they can borrow Rs 97,000 crore to make up for the deficit that is entirely due to implementation of GST, via the RBI special window.

Those aware of the issue said UP was more inclined towards exercising the first borrowing option. “The opinion at today’s

meeting was largely in favour of the first borrowing option,” said another official on condition of anonymity. UP’s GST shortfall between April and July this year is around Rs 12,000 crore, of which Rs 8,000 crore pertains to the lockdown period of April and May.