Chhattisgarh has accepted the alternative offered by the Centre’s to meet the GST compensation shortfall for States through a special borrowing window, the Finance Ministry said on Thursday. Jharkhand is now the only State yet to decide on the matter.
With Chhattisgarh’s acquiescence to the Centre’s formulation to resolve the GST compensation with States, all States, barring Jharkhand, and all union territories have now come on board. “The number of States who have favoured Option-1 has gone up to 27,” the Finance Ministry said.
Under Option-1, the Centre had offered States the option of borrowing ₹1.1 lakh crore out of the estimated ₹ 2.35 lakh crore shortfall in compensation dues payable to States for this year. After initially asking States to undertake the borrowings themselves, the Centre had later offered to borrow on States’ behalf and lend it onwards.
Over the past week, most of the States that had reservations with the Centre’s arrangement, including Kerala, West Bengal and Punjab, have communicated their acceptance of Option-1.
Chhattisgarh will get ₹3,109 crore through the special borrowing window and has been permitted to borrow an additional ₹1,792 crore. So far, ₹30,000 crore has been raised in five instalments through the special borrowing window that was operationalised in late October.
“Chhattisgarh will also receive funds raised through this window starting from the next round of borrowing,” the Ministry said.
All repayments for these special borrowings will be paid from future collections of GST cess, whose validity has been extended beyond the originally envisaged sunset date of June 2022.
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