NEW DELHI: Union government on Thursday suggested states borrow up to Rs 2.35 lakh crore ($31.8 billion) from the market to meet a tax shortfall, a top finance ministry official said.
The federal government could also support the states to raise up to Rs 97,000 crore in loans from the central bank at a lower rate to meet the states’ tax shortfall, estimated at three trillion rupees in the current fiscal year, beginning April.
“The states have sought seven days’ time to consider the proposal,” Nirmala Sitharaman, finance minister told reporters, after a virtual meeting with state finance ministers.
She added that loan amount could be repaid from the surcharge on taxes imposed on luxury and sin items like cars and tobacco products, under the Goods and Services Tax in coming years.