GST compensation shortfall: Tamil Nadu becomes 21st state to pick Option 1


Tamil Nadu grew to become the 21st state to select Possibility 1 to entry further market borrowing, of Rs 9,627 crore, on Wednesday taking the full borrowing permitted by the Centre to Rs 78,000 crore, over and above the Rs 1.1 trillion particular window supplied to all states to compensate for insufficient GST cess assortment.

The extra borrowing for states constitutes 0.5 per cent of their respective gross state home product.

On Tuesday, the Division of Expenditure had permitted 20 states to lift a further Rs 68,825 crore by the market. “With right now’s permission, 21 states have been granted permission to mobilise Rs 78,542 crore thus far,” an official launch mentioned on Wednesday.

The Rs 1.1 trillion borrowing might be facilitated by a particular window by the finance ministry. The framework for this window is being finalised, the ministry mentioned in a press release.


After Tamil Nadu joined 20 different states and Union Territories — Delhi and Puducherry — in selecting an possibility, eight states stay that haven’t opted for both of the 2 choices supplied by the Centre.

Kerala Finance Minister T M Thomas Isaac reacted strongly to the Centre’s coverage, saying it was making an attempt to “divide” states. “(I) had repeatedly appealed to the Council to extend unconditional element of further 2 per cent borrowing permitted, to make sure fiscal house for the states, whereas negotiations may go on for a brand new compromise possibility. Now the Centre makes use of it for dividing states. Nonetheless, the Centre desires a consensus,” he tweeted.

Kerala, Punjab, Chhattisgarh, and West Bengal have rejected each choices. They’re urgent the Centre to borrow as a substitute, and are exploring authorized choices to contest Centre’s determination to proceed with its provide regardless of the GST Council not reaching a consensus.

The Centre had put ahead two choices after the GST Council on August 27, each requiring borrowing to be achieved by states.

Pricey Reader,

Enterprise Customary has all the time strived laborious to supply up-to-date data and commentary on developments which might be of curiosity to you and have wider political and financial implications for the nation and the world. Your encouragement and fixed suggestions on find out how to enhance our providing have solely made our resolve and dedication to those beliefs stronger. Even throughout these tough instances arising out of Covid-19, we proceed to stay dedicated to preserving you knowledgeable and up to date with credible information, authoritative views and incisive commentary on topical problems with relevance.
We, nevertheless, have a request.

As we battle the financial influence of the pandemic, we’d like your assist much more, in order that we will proceed to give you extra high quality content material. Our subscription mannequin has seen an encouraging response from lots of you, who’ve subscribed to our on-line content material. Extra subscription to our on-line content material can solely assist us obtain the targets of providing you even higher and extra related content material. We consider in free, honest and credible journalism. Your assist by extra subscriptions may also help us practise the journalism to which we’re dedicated.

Help high quality journalism and subscribe to Enterprise Customary.

Digital Editor