|NE States get Centre’s nod to raise funds through open market borrowings|
NEW DELHI, Oct 14 - Assam has been granted permission by the Centre to raise an additional amount of amount of Rs 1,869 crore through open market borrowings.
Officials of the Union Ministry of Finance said that the Department of Expenditure today granted permission to 20 States to raise an additional amount of Rs 68,825 crore through open market borrowings.
Meanwhile, Manipur has been granted approval to raise Rs 151 crore, Arunachal Pradesh Rs 143 crore, Meghalaya Rs 194 crore, Mizoram 132 crore, Tripura Rs 297 crore and Nagaland Rs 157 crore.
Sources said that the additional borrowing permission has been granted at 0.50 per cent of the Gross State Domestic Product (GSDP) to those States which have gone for Option 1 out of the two options suggested by the Ministry of Finance to meet the shortfall arising out of the GST implementation.
In the meeting of the GST Council held on August 27, the two options were put forward and were subsequently communicated to the States on August 29. Twenty States have given their preferences for Option 1, which include Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand. Eight other States are yet to exercise an option.
Facilities available to the States which choose Option 1 inter-alia, include a special borrowing window, coordinated by the Ministry of Finance to borrow the amount of shortfall in revenue through issue of debt. The total shortfall in the revenue of the States on this account has been estimated at around Rs 1.1 lakh crore.
Sources said permission to borrow the final instalment of 0.5 per cent of the GSDP out of the 2 per cent additional borrowings has been given by the Government of India in view of the COVID pandemic, waiving the reforms condition.
The Department of Expenditure, on May 17, 2020, had provided additional borrowing limit of up to 2 per cent of the GSDP to the States. The final instalment of 0.5 per cent out of this 2 per cent limit was linked to carrying out at least three out of four reforms stipulated by the Government of India.
However, in case of States which have exercised Option 1 to meet the shortfall arising out of the GST implementation, the condition of carrying out the reforms to avail the final instalment of 0.5 per cent of GSDP has been waived. Thus, the 20 States, which have exercised Option 1, have become eligible to raise an amount of Rs 68,825 crore through open market borrowings. Action on the special borrowing window is being taken separately, the sources said.