New Delhi: The Union government has sanctioned an additional Rs 2,956 crore to the Odisha government. The states that have taken the first option offered by the central government to get the GST compensation amount have been allowed to borrow an additional 0.5% of the state’s gross domestic product (GS6DP). The state government has selected Rs 1,112.72 crore as the first option to get the GST compensation. Kerala and West Bengal have also opted for the first option today after a long hiatus. As a result, the number of states adopting the first option has increased to 25. A special provision has been made in the Reserve Bank of India to pay GST compensation to the states. The central government itself is borrowing and paying compensation to the states. So far, Rs 27,000 crore has been disbursed to the states in four installments. Now that Kerala and West Bengal have chosen the first option, the central government will give them Rs 10.18 crore. The two states will receive their dues when the fifth installment is issued to the states. A few months back, the central government was unable to pay the GST compensation to the states, saying the tax collection due to the Covid-16 epidemic would be less than the target. He told states he would raise the money through loans. The Center had calculated that the states would have to pay Rs 3 lakh crore in compensation in the current financial year. Of these, a maximum of Rs 75,000 can be recovered. That means there will be a shortfall of Rs 2.35 lakh crore. The central government has told states that they will not pay interest on loans if they borrow Rs 4,000 crore. If it borrows a total of Rs 2.35 lakh crore, it will repay both its capital and interest. The amount of the first option was later increased to Rs 1.10 lakh crore. No state accepted the second option. To date, 25 states have opted for the first option. Under the statutory provisions, states are allowed to borrow 2% of the GSDDP. Outside of that, states can borrow extra. Under the scheme, Kerala and West Bengal will be able to borrow Rs 4,522 crore and Rs 64 crore respectively.
