Telangana decides to go for Option 1 to meet GST Compensation shortfall

Our Bureau New Delhi | Updated on November 17, 2020

Telangana has joined 22 States and 3 Union Territories to go by ‘Option 1’ for meeting GST compensation shortfall. Only West Bengal, Punjab, Chattisgarh, Jharkhand and Kerala are yet to send their acceptance formally.

With this, Telangana will get ₹2,380 crore through special window borrowing and permission to raise additional ₹5,017 crore through borrowings.

The States who choose Option-1 are getting the amount of shortfall arising out of GST implementation through a special borrowing window put in place by the Government of India. The window has been operationalised now and the Centre already borrowed an amount of ₹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 23rd, November 2nd and November 9. Now, Telangana will receive funds raised through this window. The next instalment of borrowings is likely to be released on November 23.

Under the terms of Option-1, States are also entitled to get unconditional permission to borrow the final instalment of 0.5 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent additional borrowings permitted by the Centre, under Atmanirbhar Abhiyaan on May 17. This is over and above the Special Window of ₹1.1 lakh crore. On receipt of the choice of Option-1 from the Telangana, the Centre granted the Telangana government additional borrowing permission equivalent to 0.5 per cent of GSDP.

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, Telangana, Tripura, Tamil Nadu, Uttar Pradesh, and Uttarakhand, along with the three Union Territories of Delhi, Jammu & Kashmir and Puducherry.

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Published on November 17, 2020
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