With this, the 31 members of the GST Council – 28 states and 3 union territories — have formally accepted the first borrowing option of Rs 1.1 lakh crore proposed by the Centre in August , an official in the Union government said, requesting anonymity. The total revenue shortfall in 2020-21 is, however, estimated at Rs 2.35 lakh crore.
“All the 28 States and 3 Union Territories with legislature have decided to go for Option-1 to meet the revenue shortfall arising out of the GST implementation. Jharkhand, the only remaining state, has now communicated its acceptance of Option-1,” the finance ministry said in a statement.
At the 41st GST Council meeting on August 27, the Centre offered two borrowing options to states to meet their revenue shortfall in the current financial year. Two days later, it specified that under the first option, states would not have to pay either the principle or interest if they borrow only Rs 97,000 crore (later raised to Rs 1.1 lakh crore) to meet the shortfall because of implementation issues. They would have to bear significant interest costs if they chose the larger borrowing option of Rs 2.35 lakh crore that included revenue shortfall because the Covid-19 pandemic.Some of the dissenting states eventually agreed for the first borrowing option after the Centre accepted one of their demands to borrow on behalf of the state and pass on the same to them through a special window set up on October 23. However, it did not accept the other demand of 10 dissenting states to borrow the entire Rs 2.35 lakh crore that also included the part of revenue loss because of the Covid-19 pandemic.
