Bengaluru: Hit with severe resource crunch, Karnataka has decided to avail the option of `Shortfall Arising Out of GST Implementation Option' with respect to the Center's GST compensation options to the State, which would enable the State to borrow additional Rs 10,817 crore, compared to the second option.
A decision with this regard was taken during the GST Council meeting on Wednesday, which is headed by Home Minister Basavaraj Bommai and the State has decided to convey its decision to the center soon.
The Center had given two options to the States with regard to GST compensation, which included shortfall arising out of GST implementation option and shortfall arising out of GST implementation including Covid impact.
The first option would make Karnataka eligible for total compensation of Rs 18289 crore, of which, Rs 6965 crore would come from the cess collected. For the remaining amount of Rs 11324 crore, State would be able to borrow through a special window with the entire burden of principal and interest repayment would be met outof compensation cess fund in the future.
Further, an additional borrowing upto one per cent of GSDP, which is Rs 18036 crore would be available unconditionally and another one per cent borrowing can be done linked to certain reforms as suggested by Union Government. The additional borrowing can be carried forward to the next financial years, if necessary.
However, if Karnataka went with the second option, it would be eligible for a total compensation of Rs 25508 crore, of which Rs 6965 crore would come from cess collected. For the remaining amount of Rs 18543 crore would be allowed to borrow through an issue of market debt.
However, unconditional borrowing of one per cent of GSDP, which is Rs 18036 crore will not be available for the state. AS a result, net borrowing of the State would reduce substantially by Rs 10817 crore. Besides, State government has to bear the interest on the borrowing through issue of market debt, through its own resources.
