Two more States - Kerala and West Bengal choose Option-1 to meet the GST implementation shortfall

25 States and all Union Territories with Legislative Assembly have favoured Option-I

Kerala and West Bengal will get ₹ 10,197 crore through special borrowing window to meet the GST implementation shortfall.

Permission to raise additional ₹ 11,309 crore through borrowings also issued to Kerala and West Bengal.

Governments of Kerala and West Bengal have communicated their acceptance of Option-1 to meet the revenue shortfall arising out of GST implementation.  The number of States who have chosen this option has gone up to 25. All the 3 Union Territories with Legislative Assembly (i.e. Delhi, Jammu & Kashmir and Puducherry) have also decided in favour of Option-1. 

The States & Union Territories 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 since 23^rd October, 2020 and the Government of India has already borrowed an amount of ₹ 24,000 crore on behalf of the States in four instalments and passed it on to the States and Union Territories, who chose Option -1 on 23^rd October, 2020, 2^nd November, 2020, 9^th November, 2020 and 23^rd November, 2020. Now the State of Kerala and West Bengal will also receive funds raised through this window starting from the next round of borrowings.

          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, the 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 17^th May, 2020. 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 Kerala and West Bengal, the Government of India has granted additional borrowing permission of ₹ 4,522 crore to the State Government of Kerala (0.5% of Kerala’s GSDP) and ₹ 6,787 crore to the State Government of West Bengal (0.5% of West Bengal’s GSDP) .

          The amount of additional borrowing permission granted to 25 States and the amount of funds raised through special window and released to the 23 States and 3 Union Territories 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/UTs till 23.11.2020

(Rs. in Crore)

S. No.	Name of State / UT	Additional borrowing of 0.50 percent allowed to States	Amount of fund raised through special window passed on to the States/ UTs
1	Andhra Pradesh	5051	672.61
2	Arunachal Pradesh*	143	0.00
3	Assam	1869	289.54
4	Bihar	3231	1136.27
5	Goa	446	244.39
6	Gujarat	8704	2683.88
7	Haryana	4293	1266.68
8	Himachal Pradesh	877	499.74
9	Karnataka	9018	3611.17
10	Kerala #	4,522	0.00
11	Madhya Pradesh	4746	1321.98
12	Maharashtra	15394	3486.24
13	Manipur*	151	0.00
14	Meghalaya	194	32.51
15	Mizoram*	132	0.00
16	Nagaland*	157	0.00
17	Odisha	2858	1112.42
18	Rajasthan	5462	645.06
19	Sikkim*	156	0.00
20	Tamil Nadu	9627	1816.66
21	Telangana	5017	164.41
22	Tripura	297	66.04
23	Uttar Pradesh	9703	1748.29
24	Uttarakhand	1405	674.27
25	West Bengal #	6787	0.00
	Total (A):	100240	21472.16
1	Delhi	Not applicable	1706.93
2	Jammu & Kashmir	Not applicable	661.21
3	Puducherry	Not applicable	159.70
	Total (B):	Not applicable	2527.84
	Grand Total (A+B)	100240	24000.00

* These States have ‘NIL’ GST compensation gap

# Funds will be released starting from next round of borrowing.

Special borrowing window for GST shortfall expands, enabling states to access central borrowings and unconditional additional GSDP-linked borrowing. The central government's special borrowing window provides participating States and Union Territories with centrally raised funds to cover GST compensation shortfalls; States electing this option also receive unconditional permission to borrow an additional 0.50% of GSDP under the broader authorised fiscal headroom. The mechanism operates by central borrowings passed on to opting governments in instalments, with state-wise allocations and a schedule of transfers recorded; recently joined States will receive funds in subsequent borrowing rounds.