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  • 13 states submit borrowing options proposed by GST Council to meet compensation shortfall

    Published on September 14, 2020

    At least 13 States have given their borrowing options proposed by the GST Council to meet their compensation shortfall so far. The 12 States which have preferred to opt for Borrowing Option 1 are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim, Tripura, Uttar Pradesh, Uttarakhand and Odisha.

    Only one state, Manipur has so far opted for the Borrowing Option 2. Sources in the Finance Ministry said, six more states – Goa, Assam, Arunachal Pradesh, Nagaland, Mizoram and Himachal Pradesh will be giving their option in a day or two. 

    Last month, the GST Council in its 41st meeting had given two borrowing options to its member states to enable them to meet their compensation shortfall. The Option 1 offered the States to borrow the shortfall arising out of GST implementation, estimated at 97 thousand crore rupees approximately to be borrowed through issue of debt under a special window coordinated by the Ministry of Finance.

    The Option is to ensure steady flow of resources similar to the flow under GST compensation on a bi-monthly basis. The Option-2 has offered the States to borrow the entire compensation shortfall of two lakh 35 thousand crore rupees (including the Covid-impact portion) through issue of market debt.

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