Telangana Cedes to the Centre over GST

After a public and much over drawn struggle involving arduous arbitration, the State- Centre conflict arising out of the question of compensation to States for shortfalls in GST in light of the pandemic seems to be taking a turn towards closing as Telangana joins the now long list of States opting for one of the two options initially proposed by the Centre.Telangana GST

Telangana will be receiving Rs. 2,380 Crore through the special window as a result of making the current choice. 

A Finance Ministry statement declared with is only viewed as major triumph by Centre loyalists “The Government of Telangana has communicated its acceptance for Option-1 out of the two options suggested by the Ministry of Finance to meet the shortfall in revenue arising out of GST implementation.

The state has now joined 22 other states and 3 Union Territories (Delhi, Jammu & Kashmir and Puducherry) who have opted for Option-1,” As many as 22 states and 3 Union Territories have chosen to accept the Centre’s proposal albeit with much hesitation. The Centre has borrowed a sum of Rs. 18,000 crores in three installment through end of October till now and passed the money directly to the States. With the next release of funds coming up around 23rd November, Telangana is expected to receive its share.

The terms of borrowing under Option-1 clearly state that along with availing the facility of a special window for borrowings to meet the said shortfall arising out of implementation of GST, states are also entitled to get unconditional permission to borrow the final instalment of 0.50 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent additional borrowings permitted by the Government of India, under Aatmanirbhar Abhiyaan. This is over and above the special window of Rs 1.1 lakh crore.

“On receipt of the choice of Option-1 from the Government of Telangana, the Government of India has today granted the State Government of Telangana additional borrowing permission of Rs 5,017 crore (0.5 per cent of Telangana’s GSDP)” the Ministry said in a statement.

States who have already opted for 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, Telangana, Uttar Pradesh, and Uttarakhand, along with the three Union Territories of Delhi, Jammu & Kashmir and Puducherry.

However, states like Kerala, Punjab, West Bengal, Chattisgarh, Jharkhand are yet to opt for the borrowing plan proposed by the Centre saying the Centre should borrow the entire Rs 1.83 lakh crore shortfall and the stalemate shall only be considered resolved once all the states without exception come on board.



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