Chhattisgarh opts for GST loan option
NEW DELHI: Chhattisgarh is the latest state to accept the Centre’s borrowing option of ₹1.1 lakh crore to meet the Goods and Services Tax (GST) shortfall in 2020-21 that leaves Jharkhand as a lone dissenter.
“Government of Chhattisgarh has communicated its acceptance of Option-1 to meet the revenue shortfall arising out of GST implementation. The number of states who have favoured Option-1 has gone up to 27. All states except Jharkhand and all the 3 Union territories (UTs) with legislative assembly have decided in favour of Option-1,” Union finance ministry said on Thursday.
Now 30 members of the GST council—27 states and 3 UTs— have formally accepted the first borrowing option proposed by the Centre in August this year, reducing the number of dissenting states to just one, an official in the Union government said requesting anonymity.
At the 41st GST Council on August 27, the Centre had given two borrowing options to states to meet their revenue shortfall of about ₹2.35 lakh crore in the current financial year. Two days later, it had specified that under the first option, states would not have to pay either the principle or interest if they borrow only ₹97,000 crore (later this amount was raised to ₹1.1 lakh crore) to meet the GST revenue shortfall because of implementation issues. However, they would have to bear significant interest costs if they choose the larger borrowing option of ₹2.35 lakh crore that included revenue shortfalls due to an “act of god”, which was the pandemic.
Initially, 10 states—mostly administered by non-National Democratic Alliance (NDA) parties—objected and insisted that the entire borrowing would have to be done by the Centre without imposing any direct interest burden on states. They were Chhattisgarh, Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana and West Bengal.
Under the first option, the Union government on October 23 set up a special borrowing window for this purpose and already borrowed an amount of ₹30,000 crore on behalf of states, which was passed on to them.