States will have to bear the interest burden if they decide to borrow the entire Rs 2.35 trillion shortfall estimated in goods and services tax (GST) revenue: that’s the second option proposed the central government has proposed to raise resources to compensate states amid inadequate cess collection.
The finance ministry, in a letter to states, Saturday shared the details of the two options, which states will examine over seven days. The GST Council, which met Thursday, will convene again after for discussions.
The centre gave states two options at the GST Council meeting for compensation: they can either borrow up to Rs 97,000 crore, which is a shortfall arising out of GST implementation or the entire Rs 2.35 trillion, which accounts for the Covid-19 situation.
States, if they take up the first option, will have to borrow Rs 970,00 crore through issue of debt under a