On the issue of Goods and Services Tax compensation, at least 21 States/Union Territories till date have preferred to opt for borrowing option 1 proposed by the GST Council to meet their compensation shortfall, said the Finance Ministry sources on Sunday.
The States/UTs are - Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tripura, Uttarakhand and Uttar Pradesh. Manipur, the only state which had earlier opted for option 2, later preferred to change it to option 1, sources said.
A few more states are, also, to submit their preference regarding borrowing options in a day or two. However, some of them like - Jharkhand, Kerala, Maharashtra, NCT of Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal are yet to respond to the GST Council proposal to decide their options.
The Finance Ministry sources acknowledge that the GST Council with full presence of states and UTs needs, as per the GST Act, only 20 States to pass any resolution, in case voting is required on any issue. Also, it is clear from the present situation, that if the other states do not submit their options before the due GST Council meeting on October 5, 2020, then they will have to wait till June 2022 to get their compensation dues subject to the condition that the GST Council extends the cess collection period beyond 2022.
On August 27, 2020, the GST Council in its 41st meeting had decided to give its member states two borrowing options to meet their compensation shortfall and a response time of seven working days from the formal receipt of the detailed proposal on options by email.
Option 1 offered the states to borrow the shortfall arising out of GST implementation, estimated at Rs 97,000 crores approximately to be borrowed through the issue of debt under a special window coordinated by the Ministry of Finance. The option is to ensure a steady flow of resources similar to the flow under GST compensation on a bi-monthly basis.
Option 2 has offered the states to borrow the entire compensation shortfall of Rs 2.35 lakh crore (including the COVID-impact portion) through the issue of market debt. (ANI)