Kerala and West Bengal choose Option-1 to meet GST implementation shortfall

Kerala and West Bengal have communicated their 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 25. All the 3 Union Territories with Legislative Assembly – Delhi, Jammu and Kashmir and Puducherry – have also decided in favour of Option-1.

The States and 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 Centre. The window has been operationalised since 23rd October and the Union Government has already borrowed an amount of 24,000 crore rupees on behalf of the States in four installments. Centre passed it on to the States and Union Territories, who chose Option -1 on 23rd October, 2nd November, 9th November and 23rd November. Now Kerala and West Bengal will also receive funds raised through this window starting from the next round of borrowings.

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 installment of 0.50 percent of Gross State Domestic Product out of the 2 percent additional borrowings permitted by the Government under Atmnirbhar Abhiyaan on 17th May. This is over and above the Special Window of 1.1 lakh crore rupees.