Jharkhand is the latest state to go for the Centre's Option-1 with regards to meet the Goods and Services Tax (GST) revenue shortfall. The state will get Rs 1,689 crore under the special borrowing window to meet the GST revenue target in the wake of the coronavirus crisis. With this, all the 28 States and 3 Union Territories with legislature have decided to go for Option-1 to meet the revenue shortfall arising out of the GST implementation.
✅ Jharkhand has become the latest State to go for Option-1— Ministry of Finance (@FinMinIndia) December 5, 2020
✅ All States choose Option-1 to meet the GST implementation shortfall
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"Jharkhand, the only remaining state, has also communicated its acceptance for Option-1," the Ministry of Finance said in a statement today. All the 3 UTS with legislative assembly, which are members of the GST Council, had already decided in favour of Option-1.
What is Option 1?
The Centre has set up a special borrowing window for the states and UTs that choose Option-1 to borrow the amount of shortfall arising out of the poor GST revenue amid Covid-19 pandemic in India.
The window started on October 23 and Rs 30,000 crore has been borrowed on behalf of the states in five instalments. Jharkhand will now receive funds raised via this window from the next round of borrowing. The next instalment of Rs 6,000 crore will be released to the states/UTs on December 7.
Under the terms and conditions of Option-1, besides getting the facility of a special window for borrowings to meet the revenue shortfall, states can get unconditional permission to borrow the final instalment of 0.50 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent additional borrowings permitted by the Centre under Atma Nirbhar Abhiyaan on May 17. This is over and above the special window of Rs 1.1 lakh crore.
After Option-1, the central government has granted additional borrowing permission of Rs 1,765 crore (0.50 % of Jharkhand's GSDP) to Jharkhand.