Tamil Nadu gets Centre's nod to borrow Rs 9,627 cr from market to plug GST revenue hole

The Centre on Wednesday gave its nod to Tamil Nadu to raise an additional amount of Rs 9,627 crore through open market borrowings to cover the shortfall in GST dues.

The permission to borrow the amount was issued by the Department of Expenditure after the state formally communicated its acceptance for 'Option-1' to meet the shortfall arising out of GST implementation, the Union Finance Ministry said in a statement.

The government has so far given its nod to 21 states and two Union Territories to raise an additional amount of Rs 78,542 crore through open market borrowings. The permission is over and above the borrowing permission of around Rs 1.10 lakh crore to be issued to enable the states to meet the revenue shortfall arising out of GST implementation. A special window is being created by the Ministry of Finance to facilitate this borrowing.

According to the Finance Ministry, the current additional borrowing permission has been granted at 0.50% of the Gross State Domestic Product (GSDP) to those states who have opted for Option-1 out of the two options suggested by the Centre. 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 installment of 0.50% of GSDP out of the 2% additional borrowings permitted by the Centre, under Atmanirbhar Bharat Abhiyaan. This is over and above the Special Window of Rs 1.1 lakh crore.

The 21 states, run mostly by the BJP and its allies, that have availed the borrowing facility are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Tamil Nadu, Uttar Pradesh and Uttarakhand.

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Earlier this month, the Finance Ministry said there had been credible signs of economic progress in the month of September after the economic slump due to COVID-19 pandemic and the consequential lockdown, adding that the government is always ready to take any further measure necessary to reduce the sufferings of people.

The phased relaxation of lockdown has led to the economy gaining momentum to be back on track with the GST collection of Rs 95,480 crore in September which is up by 4% year-on-year.

Recently, the Comptroller and Auditor General (CAG) observed that the Modi government retained Rs 47,272 crore of the GST Compensation Cess collected in the Consolidated Fund of India during 2017-18 and 2018-19. This came in for a lot of criticism from opposition parties. 

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