Chhattisgarh opts for special window for GST compensation; Jharkhand left

Chhattisgarh has become the latest state to opt for the special window created to meet the shortfall in the goods and services tax (GST) collections, leaving only Jharkhand to have not opted for Centre's proposal. 

With this, the state has also got permission to borrow Rs 1,792 crore from markets which constitutes 0.5 per cent of its gross state domestic product (GSDP). Besides, it will get Rs 3,109 crore through a special borrowing window to meet the GST implementation shortfall.

Under this window, Centre will borrow Rs 1.1 trillion and issue back to back loans to states and union territories, which is the estimated shortfall on account of GST implementation alone and not the Covid-19 shock.

Now all states, except Jharkhand, have opted for Centre’s borrowing options.

Recently, Punjab, Kerala and West Bengal also accepted Centre’s proposal after much opposition.

In all, 27 states and three Union Territories have accepted Option 1.

The window has been operational since October 23 and the Centre has already borrowed Rs 30,000 crore on behalf of the states in five instalments and passed it on to the states and Union Territories, who chose Option-1. The funds borrowed through the special window were released to the states and UTs on October 23, November 9, November 23 and December 1.

“Now the state of Chhattisgarh will also receive funds raised through this window starting from the next round of borrowing,” the Ministry of Finance said in the release.

The Centre had estimated the total GST shortfall this year at Rs 2.35 trillion. But, only Rs 1.1 trillion out of that was due to GST and the remaining due to Covid-19. As such, it offered a special window of Rs 1.1 trillion and the states were allowed to borrow by 0.5 per cent of their respective economic size from markets.