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)

* These States have ‘NIL’ GST compensation gap

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