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November 18, 2020

Telangana decides to go for Option-1 to meet the GST implementation shortfall

by Admin in GST

Telangana decides to go for Option-1 to meet the GST implementation shortfall

The Government of Telangana has communicated its acceptance for Option-1 out of the two options suggested by the Ministry of Finance to meet the shortfall in revenue arising out of GST implementation.  The State has now joined 22 other States and 3 Union Territories (Delhi, Jammu & Kashmir and Puducherry) who have opted for Option-1. 

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 Government of India already borrowed an amount of Rs.18,000 crore on behalf of the States in three instalments and has passed it on to 22 States and 3 Union Territories on 23rd October, 2020, 2nd November, 2020 and 9th November, 2020.  Now the Government of Telangana will receive funds raised through this window.  The next instalment of borrowings is likely to be released on 23rdNovember, 2020. 

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% of Gross State Domestic Product (GSDP) out of the 2% additional borrowings permitted by the Government of India, under Atmnirbhar Abhiyaan on 17th May, 2020. This is over and above the Special Window of Rs.1.1 lakh crores. On receipt of the choice of Option-1from the Government of Telangana, the Government of India has today granted the State Government of Telangana additional borrowing permission of Rs.5,017 crore (0.5% of Telangana’s 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. The amount of additional borrowing permission granted to these States and the amount of funds raised through special window and released to the 22 States and 3 UTs so far is annexed.

State wise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the States till 17.11.2020

(Rs. in Crore)

S. No.Name of State / UTAdditional borrowing of 0.50 percent allowed to StatesAmount of fund raised thrugh special window passed on to the States/ UTs
1Andhra Pradesh5051512.96
2Arunachal Pradesh*1430.00
6Gujarat 87042046.80
8Himachal Pradesh 877381.13
10Madhya Pradesh47461008.21
19Tamil Nadu96271385.52
22Uttar Pradesh97031333.32
2Jammu & Kashmir0.00504.26
 Grand Total8893118000.00

* These States have ‘NIL’ GST compensation gap

Funds will be released starting from next round of borrowing.    

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