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Chief Minister K Chandrashekhar Rao (PTI)
Chief Minister K Chandrashekhar Rao (PTI)

Telangana govt opts for Centre's borrowing option to meet GST shortfall

  • Telangana has now joined 22 other states and three union territories (Delhi, Jammu & Kashmir and Puducherry) who have opted for Centre's Option 1 borrowing proposal
  • The state will get 2,380 crore through the special window

Telangana government on Tuesday announced that it has accepted Option 1 Centre's borrowing proposal to meet GST revenue shortfall and will get 2,380 crore through the special window. With this, Telangana has now joined 22 other states and three union territories (Delhi, Jammu & Kashmir and Puducherry) who have opted for the aforementioned option, the Ministry of Finance stated.

The Centre has already borrowed 18,000 crore on behalf of the states in three instalments and has passed it on to 22 states and 3 Union Territories on October 23, November 2 and November 9.

Now Telangana will receive funds raised through this window and the next instalment of borrowings is likely to be released on November 23, the ministry added.

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 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent additional borrowings permitted by the Government of India, under Aatmanirbhar Abhiyaan. This is over and above the special window of 1.1 lakh crore.

On receipt of the choice of Option-1 from the Government of Telangana, the Government of India has today granted the State Government of Telangana additional borrowing permission of 5,017 crore (0.5 per cent of Telangana's GSDP), the Ministry said.

States who have opted for Option-1 are – Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Rajasthan, Sikkim, Tripura, Tamil Nadu, Telangana, Uttar Pradesh, and Uttarakhand, along with the three Union Territories of Delhi, Jammu & Kashmir and Puducherry.

However, states like Kerala, Punjab, West Bengal, Chattisgarh, Jharkhand are yet to opt for the borrowing plan proposed by the Centre saying the Centre should borrow the entire 1.83 lakh crore shortfall. Under the borrowing plan (Option-1), the Centre would borrow from market 1.10 lakh crore which the revenue shortfall on account of GST implementation. The remaining 73,000 crore shortfall is estimated to be the revenue impact of the COVID-19 pandemic.

The second option given by the Centre was for the states to borrow the entire 1.83 lakh crore collection shortfall.

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