TN, Delhi pick borrowing option to meet GST deficit
The seven dissenting states left now are Chhattisgarh, Jharkhand, Kerala, Punjab, Rajasthan, T’gana and W Bengal
DELHI DY CM MANISH SISODIA SAID THE CAPITAL WAS LEFT WITH NO CHOICE BUT TO GO FOR THE FIRST OPTION
Tamil Nadu and Delhi are the latest states to opt for the first borrowing option proposed by the Centre through the Goods and Services Tax (GST) Council, even as the Union finance ministry on Wednesday permitted the southern state to raise ₹9,627 crore from the open market, taking the total amount for 21 states to ₹78,452 crore.
“The permission was issued after the State (Tamil Nadu) formally communicated its acceptance for Option 1 to meet the shortfall arising out of GST implementation. Twenty-one States and two Union Territories -- Delhi and Jammu & Kashmir (J&K) -- have so far requested Option 1,” the Union finance ministry said in a statement.
The seven dissenting states left now are Chhattisgarh, Jharkhand, Kerala, Punjab, Rajasthan,
Telangana and West Bengal. Initially, 10 states had opposed the proposal, including Maharashtra, Tamil Nadu and Delhi.
The Centre had given states the choice of borrowing ₹97,000 crore (the shortfall resulting from GST implementation issues) without having to pay principal or interest or the entire ₹2.35 lakh crore revenue deficit from the indirect tax (including that arising from the Covid-19 pandemic) projected for this fiscal year.
The ₹97,000 crore amount was subsequently raised to ₹1.1 lakh crore. The principal and interest in the first option would have been paid out of the cess levied on luxury products and sin goods such as liquor, cigarettes, aerated water, automobiles and coal.
The borrowing plans of Delhi and J&K will soon be forwarded to the department of expenditure (DoE) by the home ministry, a government official said, requesting anonymity. DoE is an arm of the Union finance ministry, which is coordinating borrowing by states along with the Reserve Bank of India (RBI).
“With the latest development, only seven states have so far refrained from taking the borrowing option. Puducherry had already indicated its preference for the first borrowing option, but it is yet to formally communicate the same to DOE,” the official said.
Delhi deputy chief minister Manish Sisodia, who also holds the finance portfolio, said the Capital was left with no choice but to go for the first option suggested by the Centre. “The Centre had already told us that Option 2 was not applicable for Union Territories such as Delhi and Puducherry,” he said.
“Delhi is facing a shortfall of ₹16,000 crore in GST this year. As per the GST amendment, the central government should take a loan and give this loan to us and the same can be paid from the cess after 2022... Now, against the shortfall of ₹16,000 crore, we would get a loan of ₹6,000 crore. We have to survive under a huge shortfall which will result in cutting on lots of schemes and plans,” he told HT.
The 21 states that have been granted clearance to borrow are: Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat,
Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tamil Nadu, Tripura, Uttar Pradesh and Uttarakhand.
“The borrowing permission issued to the 21 states [on Tuesday and Wednesday] is over and above the borrowing permission of around ₹1.10 lakh crore to be issued to enable the states to meet the revenue shortfall arising out of GST implementation. A special window is being created by the Ministry of Finance to facilitate this borrowing,” the Union finance ministry said.
The current additional borrowing permission has been granted at the rate of 0.50% of Gross State Domestic Product (GSDP) to states as a precondition for picking the first option.
The official quoted above said: “After Maharashtra, Tamil Nadu and Delhi agreeing to borrow...Some more states could opt for the first option in next couple of days.”