Kerala and Bengal accept government GST loan option
Kerala and West Bengal are the latest members of the Goods and Services Tax Council (GST) to accept the Center’s loan option of Rs1.1 lakh crore to cover the indirect tax revenue shortfall in 2020-21, reducing the number from dissident states to three on Sept. 10, the union’s finance ministry said on Wednesday.
“The governments of Kerala and West Bengal have communicated their acceptance of Option 1 to cover the revenue shortfall arising from the implementation of the GST,” the ministry said in a statement. With this, the number of states and territories of the Union (UT) that have accepted the first borrowing option has risen to 28, he added.
“While 28 members have formally accepted the first loan option proposed by the Center, the total number of states will soon reach 29, as Punjab is also considering joining the majority,” said a Union government official requesting the anonymity. The Center has not yet obtained formal acceptance from the governments of Punjab, Chhattisgarh, Jharkhand, the official added.
At the 41st GST Council on August 27, the Center had provided two loan options to the states to cover their income shortfall of around Rs 2.35 lakh crore in the current financial year. Two days later, he had specified that according to the first option, states would not have to pay either principle or interest if they only borrow Rs97,000 crore (later this amount was raised to Rs1.1 lakh crore) to meet with GST revenue. deficit due to implementation problems. However, they would have to bear significant interest costs if they choose the larger loan option of Rs2.35 lakh crore which includes income shortfall due to an ‘act of God’, which was the Covid-19 pandemic.
Initially, 10 states, mostly run by parties not belonging to the National Democratic Alliance (NDA), opposed and insisted that the entire loan should be made by the Center without imposing any direct interest burden on the states. They were Chhattisgarh, Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal.
The states and UT that opted for the first option are obtaining the amount of deficit that arises from the implementation of the GST through a special debt window, according to the statement. The Union government has already borrowed 24 billion rupees on behalf of the states in four installments during this window, which went live on 23 October.
“Now, the state of Kerala and West Bengal will also receive funds raised through this window from the next round of loans,” the Finance Ministry said.
While awaiting formal notification regarding Punjab, 28 other states and UT that accept the first option are: Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur . , Meghalaya, Mizoram, Nagaland, Odisha, Rajasthan, Sikkim, Telangana, Tripura, Tamil Nadu, Uttar Pradesh, Uttarakhand, Delhi, Jammu and Kashmir, Puducherry, West Bengal and Kerala.