Congress-Run Rajasthan Chooses Option 1 To Meet GST Compensation Shortfall
Traffic passes the Hawa Mahal palace in Jaipur, Rajasthan. Photographer: Udit Kulshrestha/Bloomberg

Congress-Run Rajasthan Chooses Option 1 To Meet GST Compensation Shortfall

Congress-administered Rajasthan has decided to opt for borrowing option 1 to meet the shortfall in goods and services tax collections, signalling a truce between opposition parties and the Bharatiya Janata Party-led federal government.

Besides Rajasthan, the Congress administered-union territory of Puducherry also earlier opted for the special borrowing window, under which the central government will borrow Rs 1.1 lakh crore and on-lend the amount to states.

States yet to express their borrowing option are Chhattisgarh, Jharkhand, West Bengal, Punjab, Kerala and Telangana. States that have so far chosen option 1 are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Rajasthan, Sikkim, Tripura, Tamil Nadu, Uttar Pradesh and Uttarakhand, and the union territories of Delhi, Jammu and Kashmir and Puducherry.

Rajasthan will receive the instalment of borrowing on Nov. 9, the Ministry of Finance said in a statement. The central government has already borrowed Rs 12,000 crore through weekly auctions, and loaned the money to 16 states and three union territories.

The central government has also granted permission to Rajasthan to additionally borrow Rs 5,462 crore, or 0.5% of the north-western state’s gross domestic product. States picking option 1 to meet the GST compensation shortfall can borrow an additional 0.5% of their GSDP.

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