13 states submit borrowing option to Centre to fund GST shortfall

 As many as 13 states ruled by BJP and parties that have supported it on various issues have submitted ir borrowing options to Centre to meet GST revenue shortfall.se 13 states include Bihar, Odisha, Andhra Presh, Gujarat, Uttarakhand and Meghalaya.

Six more states - Goa, Assam, Arunachal Presh, Nagaland, Mizoram and Himachal Presh - will be giving ir option in a day or two, finance ministry sources said. In current fiscal, states are staring at a staggering Rs 2.35 lakh crore Goods and Services Tax (GST) revenue shortfall.

Of this, as per Centre's calculation, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is impact of COVID on states' revenues. Centre late last month gave two options to states to borrow eir Rs 97,000 crore from a special window facilitated by RBI or Rs 2.35 lakh crore from market and has also proposed extending compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay borrowing.

Of 13 states, 12 have preferred to opt for borrowing from special window facilitated by RBI. se states are AP, Bihar, Gujarat, Haryana, Karnataka, Mhya Presh, Meghalaya, Sikkim,Tripura, UP, Uttarakhand and Odisha.Only Manipur has so far opted for borrowing from market.

However, n-BJP ruled states are at loggerhes with Centre over issue of funding shortfall.Chief ministers of six n-BJP ruled states of West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nu have written to Centre opposing options which require states to borrow to meet shortfall.

Sources said a few states inste of expressing ir option preference have submitted ir views to Chairperson of GST Council and are yet to decide on options. GST Council in its 41st meeting on August 27, 2020, h given two borrowing options to its member states to enable m to meet ir compensation shortfall at “single rate” of interest at RBI's single window facilitated by Finance Ministry.

Sources said Council also discussed that in current ecomic scenario it may t be possible to increase tax rates or do rate rationalisation to meet up compensation shortfall. However, borrowing could be an option to dress this challenge. central government is committed to helping states to utmost to meet compensation shortfall through borrowing, y mentioned.