Punjab chooses Option-1 to meet the GST implementation shortfall; to get Rs 8,359 cr via special borrowing window


The number of states which have chosen this option has gone up to 26


Punjab has picked Option-1 to meet the revenue shortfall arising out of Goods and Service Tax (GST) implementation. With this, Punjab will get Rs 8,359 crore through special borrowing window to meet its GST implementation shortfall, said a Finance Ministry statement.

The number of states which have chosen this option has gone up to 26. All the 3 Union Territories with Legislative Assembly (i.e. Delhi, Jammu & Kashmir and Puducherry) have also decided in favour of Option-1.

The states and Union Territories which choose Option-1 are getting the amount of shortfall arising out of GST implementation through a special borrowing window put in place by the Centre. The window has been operationalised since October 23, 2020 and the Centre has already borrowed an amount of Rs 24,000 crore on behalf of the states in four installments and passed it on to the states and Union Territories, which chose Option-1 at different times this month and last month.

Now Punjab 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 installment of 0.50 percent of Gross State Domestic Product (GSDP) out of the 2 percent additional borrowings permitted by the Centre, under AtmnirbharAbhiyaan 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 from the Punjab, the Centre has granted additional borrowing permission of Rs 3,033 crore to Punjab (0.5 percent of Punjab’s GSDP).

Image credit: Financial Express

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