SHILLONG: The Centre has permitted Meghalaya to borrow Rs 194 crore from the market to tide over the state’s cash crunch.
Along with the state, the department of expenditure, ministry of finance, has granted permission to 20 states to raise an additional amount of Rs 68,825 crore through open market borrowings.
The additional borrowing permission has been granted at the rate of 0.50 percent of the Gross State Domestic Product (GSDP) to states that have opted for option one out of the two options suggested by the finance ministry to meet the shortfall arising out of GST (goods and services tax) implementation.
In the meeting of the GST Council held in August this year, two options were put forward and were subsequently communicated to the states later.
Twenty states, including Meghalaya, have given their preferences for option one while eight states are yet to exercise an option.
Facilities available to the states who choose option one inter-alia include a special borrowing window, coordinated by the finance ministry 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.
Another facility includes permission to borrow the final instalment of 0.5 per cent of GSDP out of the two percent additional borrowings permitted 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 an additional borrowing limit of up to 2 per cent of GSDP to the states.
The final instalment of 0.5 per cent out of this two percent 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 one to meet the shortfall arising out of GST implementation, the condition of carrying out reforms to avail the final instalment of 0.5 per cent of GSDP has been waived.
Hence these 20 states, who have exercised option one, have become eligible to raise an amount of Rs 68,825 crore through open market borrowings.
