AP to make most of Centre's debt window

AP to make most of Centre’s debt window

AP to make most of Centre’s debt window 


  • The Union govt to allow a ‘Special Window’ for the States to borrow funds to compensate GST shortfall
  • The State govt is planning to borrow as much as possible in the wake of Covid-induced financial crisis
  • The borrowing under the Special Window will not be considered as debt of the State under any norms of Finance Commission and other such bodies

Amaravati: With the Centre issuing guidelines for borrowing to deal with shortfall due to GST implementation, the state government is exploring all ways to scoop up as much as possible to overcome the deficit at this crucial juncture of Covid-19 pandemic, sources in the finance department said here on Saturday.

"A Special Window has been allowed by the ministry of finance through which the state is set to borrow. The effort is to ensure a steady flow of resources similar to the flow under GST compensation on a bi-monthly basis. The Centre has assured us that a special borrowing permission would be given by it under Article 293 over and above any other borrowing ceilings eligible under any other normal or special permission notified by the department of expenditure," they said.

The sources added that the interest on the borrowing under the Special Window will be paid from the Cess as and when it arises until the end of the transition period. After the transition period, principal and interest will also be paid from proceeds of the Cess, by extending it beyond the transition period for such period as may be required. The state will not be required to service the debt or to repay it from any other source.

States will also be given permission to borrow the final installment of 0.5 per cent originally intended as a bonus for completing at least three of the four specified reforms even without meeting the pre-conditions. This will enable borrowing of approximately the entire shortfall without much burden and easily in aggregate, the sources added.

The borrowing under the Special Window will not be treated as debt of the state for any norms which may be prescribed by the Finance Commission, etc., they said.

There is also a provision to ensure that the entire shortfall including the Covid-impact portion could be borrowed by Andhra Pradesh now.

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