The Centre plans to let states borrow a higher sum for its inability to pay their GST dues because of the pandemic as it looks to avoid confrontation at the GST Council meet on Monday though the six non-BJP states have shown no inclination to climb down on their demand to junk the proposal altogether

The change may be done under the first option scheme, with the sum raised to Rs 1.10 lakh crore from Rs 97,000 crore. This option was supported by 21 states mostly ruled by the BJP or states which have supported it on issues.

Finance ministry sources said the higher borrowing could be offered after some states questioned the assumptions made by the Centre on growth.

Revenue secretary Ajay Bhushan Pandey had said the sum of Rs 97,000 crore was fixed based on a 10 per cent growth in the GST receipts for 2019-20. The second option invloved borrowing Rs 2.35 lakh crore from the market, which has not been accepted by any of the states.

However, some of the states while going for the first option had objected to the 10-per-cent projection. A growth of 7 per cent in state GST receipts was the more likely estimate as growth in the receipts in 2018-19 and 2019-20 were 6-7 per cent; and given the fall in collections in this fiscal, the 7-per-cent figure was more realistic.

The lower growth estimation would increase the compensation sum to about Rs 1.10 lakh crore, which could be offered to the states during the council meet on Monday, sources said.

However, the chief ministers of six non-BJP ruled states — Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu — have written to the Centre opposing both the options.

In the current fiscal, the states are staring at a staggering Rs 2.35 lakh crore goods and services tax (GST) revenue shortfall. About Rs 97,000 crore of the sum, according to the Centre’s calculation, is on account of GST implementation and the rest Rs 1.38 lakh crore the impact of Covid-19 on states revenues.

The Centre in August gave two options to the states: borrow either Rs 97,000 crore from a special window facilitated by the RBI or borrow Rs 2.35 lakh crore from the market. The Modi government has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.