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Borrow from RBI to bridge GST gap: Centre tells States
Why is it in news?
- A special window could be provided to states, in consultation with the RBI.
Details:
- The Centre on Thursday acknowledged that States are likely to face a GST revenue gap of ₹ 3 lakh crore this year.
- Compensation cess collections are only expected to bridge 22% of this gap.
- Of the remaining ₹ 35 lakh crore, the Centre said only ₹ 97,000 crore was due to GST implementation itself.
- The Centre then offered States two options for borrowing to meet the shortfall.
- A special window could be provided, so that the States can get this ₹ 97,000 crore at a reasonable rate of interest from RBI, and the amount can be repaid after five years through the collection of cess.
- States choosing thist option may get 0.5% relaxation in their borrowing limits under the FRBM Act.
- Another option is that the entire gap of ₹ 35 lakh crore can be met by the borrowing by the States.