All states except Jharkhand opt for first option to meet GST compensation shortfall

"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 three union territories with legislative assembly have decided in favour of option-1," finance ministry statement said.

This sets aside only Jharkhand, which is yet to communicate to the Centre whether it will go ahead with option-1 or not.

Hemant Soren, chief minister of Jharkhand in the past had written to the Centre expressing concerns on the option-1 decided by the GST Council and has said it would not like to avail this option and rather expects the Centre to come back on the discussion table to find an amicable solution.

According to Centre, the states and union territories who choose option-1 are getting the amount of shortfall arising out of GST implementation through a special borrowing window put in place by the government of India.

The window has been operationalised since October 23, 2020 and the government of India has already borrowed an amount of Rs 30,000 crore on behalf of the states in five instalments and passed it on to the states and union territories, who chose option-1.

The funds borrowed through the special window were released to the states and UTs on October 23, 2020, November 2, 2020, November 9, 2020, November 23, 2020 and December 1, 2020. Now the state of Chhattisgarh will also receive funds raised through this window starting from the next round of borrowing.

Under the terms of option-1, besides getting the facility of a special window for borrowings to meet the shortfall arising out of GST implementation, the states are also entitled to get unconditional permission to borrow the final instalment of 0.50 percent of gross state domestic product (GSDP) out of the 2 percent additional borrowings permitted by the government of India, under AtmanirbharAbhiyaan on May 17, 2020.

This is over and above the special window of Rs 1.1 lakh crore. On receipt of the choice of option-1, the government of India has granted additional borrowing permission of Rs 1,792 crore to Chhattisgarh (0.50  percentof Chhattisgarh’s GSDP), finance ministry said in its statement.

The amount of additional borrowing permission granted to 27 states and the amount of funds raised through special window and released to the states and union territories

Statewise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the states/UT still 02.12.2020.