Punjab Chooses Option-1 to Meet the GST Implementation Shortfall

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 operationalisedsince 23^rd October, 2020 and the Government of India has already borrowed an amount of Rs.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 AtmnirbharAbhiyaan on 17^th May, 2020. This is over and above the Special Window of Rs.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 Rs.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.

Statewise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the States/UTstill 28.11.2020

(Rs. in Crore)

* These States have ‘NIL’ GST compensation gap

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