States can together raise ₹68,825 cr.
A day after the GST Council failed to arrive at a consensus on the mode of borrowings to meet compensation shortfalls facing the States, the Finance Ministry permitted 20 States, including Maharashtra, to raise ₹68,825 crore through open market borrowings. These 20 States, the expenditure department said, had conveyed their acceptance of the first borrowing option offered by the Centre to meet GST compensation shortfalls. Under this, States could borrow ₹1.1 lakh crore from the market with principal and interest payments to be paid out of GST cess collections whose levy has been extended beyond 2022. While all BJP-ruled States had acceded to this option, several opposition-ruled States had sought that the Centre borrow from the market and pay them. Maharashtra’s Uddhav Thackeray-led MVA government is the first to break ranks with the Opposition in opting for the market borrowing, and has been permitted to raise ₹15,394 crore, the highest among these 20 States. Tamil Nadu, West Bengal, Kerala, Chhatisgarh, Jharkhand, Rajasthan, Punjab and Delhi are yet to communicate their choice.
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