Punjab chooses Option-1 to meet the GST implementation shortfall

26 States and all Union Territories with Legislative Assembly have favoured Option-1

Punjab will get ₹ 8,359 Crores through special borrowing window to meet the GST implementation shortfall

Permission to raise additional ₹ 3,033 Crores through borrowings also issued to Punjab

Governments of Punjab has communicated 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 26. 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 operationalized since 23^rd October, 2020 and the Government of India has already borrowed an amount of ₹ 24,000 crores on behalf of the States in four instalments and passed it on to the States and Union Territories, who chose Option-1on 23^rd October, 2020, 2^nd November, 2020, 9^th November, 2020 and 23^rd November, 2020. Now the State of Punjab will also receive funds raised through this window starting from the next round of borrowing.

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 crores. On receipt of the choice of Option-1 from the Government of Punjab, the Government of India has granted additional borrowing permission of ₹ 3,033 crores to the State Government of Punjab(0.5% of Punjab’s GSDP).

The amount of additional borrowing permission granted to 26 States and the amount of funds raised through special window and released to the 18 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/UT still 28.11.2020

(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	Punjab #	3033	0.00
19	Rajasthan	5462	645.06
20	Sikkim*	156	0.00
21	Tamil Nadu	9627	1816.66
22	Telangana	5017	164.41
23	Tripura	297	66.04
24	Uttar Pradesh	9703	1748.29
25	Uttarakhand	1405	674.27
26	West Bengal #	6787	0.00
	Total (A):	103273	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)	103273	24000.00

* These States have ‘NIL’ GST compensation gap

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

Special borrowing window for GST shortfall enables states choosing Option 1 to receive central borrowings and additional GSDP borrowing permission. Punjab has opted for Option 1 to address the GST implementation revenue shortfall, entitling it to amounts raised through a centrally operationalised special borrowing window and to unconditional permission to undertake the final instalment of additional GSDP linked borrowing authorised under the central Atmanirbhar package; Punjab will receive funds raised through the window from the next borrowing round, and a state wise annexure sets out additional borrowing permissions and amounts passed on so far to participating States and Union Territories.