The GST Council meeting on Monday may turn into a stormy affair, with non-BJP ruled States still being in disagreement with the Centre on the compensation issue.

While as many as 21 States , mostly ruled by BJP or parties which have supported it on issues, had till mid-September opted to borrow ₹97,000 crore to meet the GST revenue shortfall in the current fiscal, opposition-led states like West Bengal, Punjab and Kerala have not yet accepted the borrowing option given by the Centre.

Sources said in the 42nd meeting of the Council, which will be held on October 5, opposition-ruled States would object to the Centre’s borrowing options and demand alternative mechanism for funding GST compensation deficit. They feel that the constitutional liability of compensating States lies with the Union government.

In the current fiscal, the States are staring at a staggering ₹2.35 lakh crore Goods and Services Tax (GST)

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Ahead of crucial GST Council meeting on Monday, Deputy Chief Minister and Finance Minister of Bihar Sushil Kumar Modi has pressed for initiation of special window for borrowing to meet compensation shortfall. At the same time, State such as Punjab wants Dispute Resolution Mechanism to be set up as early as possible.

“The process of borrowing too is expected to take some time since arrangements will have to be made to create the special window through which State can borrow with convenience. I would, urge you to make necessary arrangements for initiating the process for arranging the special window so that willing State can go ahead and borrow,” Modi wrote in a letter to the Finance Minister Nirmala Sitharaman.

Also read: CAG raps Centre over non-utilisation of cesses, levies for specified purposes

In August, during 41st meeting of GST Council, it was decided to give two borrowing options. First one

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Completing two State-level reforms, Andhra Pradesh has become the first State to be eligible for two tranches of addition borrowing. This means it can borrow 0.5 per cent over and above the standard 3.5 per cent of the Gross State Domestic Product (GSDP), said a statement from the Union Finance Ministry.

Meanwhile, Uttar Pradesh has become the sixth State to successfully undertake the ‘One Nation-One Ration Card’ reform, making itself eligible for additional borrowing of 0.25 per cent over and above 3.5 per cent of GSDP. With this, a total of six States (including Telangana, Karnataka, Goa and Tripura) have been permitted to raise additional resources through open market borrowings (OMB) over and above the limit prescribed under the Fiscal Responsibility and Budget Management (FRBM) Act.

Also read: CII congratulates Andhra Pradesh, Telangana on topping Ease of Doing Business Ranking

The latest move will make an additional ₹7,106 crore available

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New Jersey business and industry leaders reiterated their concerns about a plan to borrow $4.5 billion from the federal government that Gov. Phil Murphy says is needed to meet budget shortfalls due to the novel coronavirus pandemic.

The Select Commission on Emergency COVID-19 Borrowing heard from leaders before approving the borrowing plan unanimously. The Commission includes Senate President Steve Sweeney, Assembly Speaker Craig Coughlin, Sen. Paul Sarlo, chair of the Senate Budget and Appropriation Committee and Assemblywoman Eliana Pintor Marin, chair of the Assembly Budget Committee.

Chris Emigholz questioned a $1.4 billion difference in revenue estimates between the Murphy administration and the Office of Legislative Services and a $2.5 billion budget surplus.

“A shortfall has two sides, and increased surplus and spending on local projects unrelated to the crisis should not be used to inflate the spending side of that shortfall, said Christopher Emigholz, vice president of government affairs

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Indonesian Rupiah, Indian Rupee And Filippino Peso As Gloom Lifting From Asia's Emerging Currencies After Rate Hikes

Photographer: Brent Lewin/Bloomberg

Indian bond traders’ worst fears may be realized this week if Prime Minister Narendra Modi’s government announces a further increase to its mammoth borrowing plan.

Traders expect the government to lift its borrowing estimate for the October-March period to six trillion rupees ($81.5 billion) from the existing 5 trillion rupees, according to 10 out of 16 traders in a Bloomberg survey. The timing for this increase couldn’t be worse as the Reserve Bank of India is set to keep its policy rates on hold on Thursday amid a persistently high inflation.

“With no rate cut baked-in, the only thing the market is waiting for is the borrowing calendar, and cues in the RBI policy,” said Lakshmi Iyer, chief investment officer debt at Mumbai-based Kotak Mahindra Asset Management Co. “Additional borrowings will definitely spook the market if there isn’t a game plan to support extra

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By Swati Bhat

MUMBAI (Reuters) – The Indian government is unlikely to increase its second half borrowing when it announces its full-year target this month, but will leave room for any hike towards the end of the fiscal year in March if needed, economists and market participants said.

The federal government has already borrowed more than half of the planned full year borrowing of a record 12 trillion rupees ($162.36 billion) in the fiscal first half that runs through September, and the government is likely to finish borrowing the rest by January, economists said.

“Given the highly uncertain outlook on the fiscal math, H2 borrowings might be completed by early 2021, with any larger-than-expected revenue shortfalls to be plugged thereafter by additional issuance,” said Radhika Rao, an economist with DBS.

The majority of the 10 market participants and economists interviewed by Reuters agreed with this view, saying any hike in

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By David Milliken and Andy Bruce

LONDON (Reuters) – British public borrowing surged again in August to a new record high, driven by huge outlays to combat the coronavirus pandemic, with the budget deficit so far this tax year overtaking its full-year peak during the global financial crisis.

The government has now borrowed 173.7 billion pounds ($221.8 billion) in the five months since the start of the financial year in April, outstripping the previous record of 157.7 billion pounds set in the 12 months ending March 2010.

Government budget forecasters have warned the deficit could hit 372 billion by the end of the tax year, raising borrowing as a share of gross domestic product to 18.9%, a level not seen since World War Two – and far above long-term sustainable rates.

Finance minister Rishi Sunak said on Thursday that now was the time to focus on restoring growth, not reducing

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Seven States, including Gujarat, Madhya Pradesh and Bihar, have formally communicated to the Centre their borrowing option to meet the GST compensation shortfall.

Tuesday was the last day for picking the options. This tally shows the status till Tuesday morning and is expected to change at the end of the day.

According to sources, Gujarat, Karnataka, Bihar, Madhya Pradesh and Tripura have given ‘Option 1’ as their choice, while Manipur and Sikkim have decided on ‘Option 2.’ Interestingly, Assam is missing from the list, though it was among the first three, along with Bihar and Karnataka, to announce its preference.

Tamil Nadu, Telangana, Punjab, West Bengal, Chhattisgarh, Jharkhand and Rajasthan and the two Union Territories — Delhi and Puducherry — have sought intervention from the Prime Minister for borrowing by the Centre. In fact, Punjab, West Bengal and Chhattisgarh have formally announced that they have rejected both the options.

GST

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The interest rate that European banks use to lend among themselves dropped to a record low this week in a sign of how credit markets have been distorted by central banks’ aggressive measures this year.

The euro short-term rate, known as €STR, slipped to minus 0.555% Wednesday, from minus 0.539% at the beginning of the year. On Monday, the cost of overnight lending operations between the banks dropped to minus 0.557%, the lowest it has been since coming into effect in October 2019 after rate-rigging scandals led to the elimination of previous benchmarks.

The subzero rates essentially mean that banks and other financial institutions are offering to pay rivals to take money off their hands, albeit for a short period.

The recent decline in borrowing costs is a result of the European Central Bank’s massive monetary stimulus program, which includes generous loans made to the region’s banks to bolster the

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The Centre proposes easier norms for option related with borrowing limited to GST compensation shortfall due to ‘implementation issue’. However, States will have to bear interest if they opt for borrowing total shortfall which is sum of amount because of GST implementation issue and Covid pandemic.

States will be free to choose any of the two options. First option talks about borrowing ₹97,000 crore by States through special window, while second option prescribes borrowing ₹2.35 lakh crore through open market mechanism.

“After the scheme is finalized, the States can choose either Option 1 or Option 2 and accordingly their compensation, borrowing, repayment will be dealt as per their choice. The options are applicable only for the shortfall occurring in the current financial year,” a Finance Ministry statement said. The statement gave details about letter sent to States’/Union Territories’ Finance Secretaries said. It has been decided that Union Finance Secretary and

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