GST compensation shortfall: Tamil Nadu turns into 21st state to choose Choice 1

2020/10 14 19:10

Tamil Nadu grew to become the 21st state to choose Choice 1 to entry extra market borrowing, of Rs 9,627 crore, on Wednesday taking the whole 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 zero.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 via the market. “With immediately’s permission, 21 states have been granted permission to mobilise Rs 78,542 crore up to now,” an official launch mentioned on Wednesday.

The Rs 1.1 trillion borrowing shall be facilitated via 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 choosing 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 extra 2 per cent borrowing permitted, to make sure fiscal area 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 resolution to proceed with its provide regardless of the not reaching a consensus.

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

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