Tamil Nadu gets Centre’s nod to borrow additional Rs 9,627 cr; 21 states now allowed to mobilise Rs 78,452 cr

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The permission was issued on Wednesday after the state formally communicated its acceptance for Option-1 to meet the shortfall arising out of GST implementation

The Union Finance Ministry granted permission to Tamil Nadu to raise an additional amount of Rs 9,627 crore through open market borrowings.

The permission was issued on Wednesday after the state formally communicated its acceptance for Option-1 to meet the shortfall arising out of GST implementation. As many as 21 states and 2 Union Territories, Delhi and Jammu & Kashmir, have so far requested Option-1, said the ministry.

On Tuesday, the Department of Expenditure under the Finance Ministry had issued permission to 20 states to raise an additional amount of Rs 68,825 crore through open market borrowings.  With the latest permission, 21 states have been granted permission to mobilize Rs 78,542 crore so far.

The borrowing permission issued to the 21 states is over and above the borrowing permission of around Rs 1.10 lakh crore to be issued to enable the states to meet the revenue shortfall arising out of GST implementation. A special window is being created by the Ministry of Finance to facilitate this borrowing.

The current additional borrowing permission has been granted at 0.50 percent of the Gross State Domestic Product (GSDP) to those states who have opted for Option-1 out of the two options suggested by the Ministry of Finance.

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, states are also entitled to get unconditional permission to borrow the final instalment of 0.50 percent of GSDP out of the 2 percent additional borrowings permitted by the Government of India, under Atmanirbhar Abhiyaan on May 17, 2020. This is over and above the Special Window of Rs 1.1 lakh crore.

Twenty states who were granted the permission yesterday are - Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand.

Image credit: India TV

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