Centre places before states 2 options for borrowing to meet GST revenue shortfall

Centre on Thursday placed before GST Council two options for borrowing by states to meet shortfall in GST revenues, pegged at Rs 2.35 lakh crore in current fiscal.

Briefing reporters after 41st meeting of GST Council, Finance Minister Nirmala Sitharaman said ecomy is facing an extraordinary 'Act of God' situation, which may result in ecomic contraction.

As per Centre's calculation, compensation requirement by states in current fiscal would be Rs 3 lakh crore, of which Rs 65,000 crore is expected to be met from cess levied in GST regime. Hence, total shortfall is estimated at Rs 2.35 lakh crore.

Revenue Secretary Ajay Bhushan Pandey said of this, Rs 97,000 crore is on account of GST shortfall, while rest is due to impact of COVID-19 on ecomy.

Pandey said a special window can be provided to states, in consultation with RBI, at a reasonable interest rate for borrowing of Rs 97,000 crore. amount can be repaid after five years (of GST implementation) ending 2022 from cess collection.

second option before states is to borrow entire Rs 2.35 lakh crore shortfall under special window. "States have been given seven days' time to think over proposal," Pandey said.

(Photo Credit: Twitter/FinMinIndia)