Centre communicates borrowing options to settle GST compensation to States

Agencies
August 29, 2020

New Delhi, Aug 29: States will have to forego borrowing flexibility of 1% of state GDP given under the Atmanirbhar Bharat package if they opt to settle their entire GST compensation shortfall for FY21 through market borrowings.

As per the design of the options given to the states by the Centre to meet GST compensation gap, if the states decide to meet the entire shortfall of Rs 235,000 crores (including the COVID-impact portion) through issue of market debt, then additional unconditional borrowing limit of 0.5% and the final (bonus) tranche of 0.5% provided under the Atmanirbhar Bharat package as a COVID relief measure will not be available separately.

The finance ministry, which gave two options to states at the GST council meeting on August 27 to cover the GST compensation shortfall this year, on Saturday sent a written communication on the two borrowing options to States who have been given seven days time to revert with their preference on the proposals. A meeting of State Finance Secretaries with the Union Finance Secretary and Secretary (Expenditure) has also been scheduled on September 1 for clarifying issues.

Under option one, the Centre has offered a special borrowing window to states, in consultation with the RBI, for an amount of Rs 97,000 crore (the shortfall arising out of GST implementation) at a "reasonable" interest rate.

The Centre will endeavour to keep the borrowing cost at or close to the G-sec yield, and in the event of the cost being higher, will bear the margin between G-secs and the average of State Development Loan yields up to 0.5% (50 basis points) through a subsidy.

The borrowing under the first option will also not be treated as debt of the state and can be availed over and above any other borrowing ceilings eligible under any other normal or special permission notified by the Department of Expenditure.

Also, under option one, the interest on the borrowing 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 the proceeds of the Cess, by extending the Cess 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.

Moreover, in this option the state would also be permitted to avail full additional borrowing limits given under the Atmanirbhar Bharat package with the last 0.5 per cent bonus also being given unconditionally. Unused borrowing could also be carried forward to the next year by the states.

Under the Atmanirbhar Bharat package states allowed unconditional additional borrowing of 0.5 per cent of SGDP (over and above 3 per cent allowed) performance or reforms linked borrowing of 1 per cent in four reaches of 0.25 per cent each and additional 0.5 per cent borrowing on completing three out of four reforms.

The second option given by the centre allows states to borrow entire projected GST compensation shortfall of Rs 2,35,000 crore (total shortfall of Rs 3 lakh crore minus Rs 65,000 crore collected as GST compensation cess) for FY21. But this borrowing will be allowed by subsuming the additional unconditional borrowing limit of 0.5% and the final (bonus) tranche of 0.5% given to states as a special limit to fight the COVID pandemic.

Though reform linked borrowing will be permitted under this option, it would not be carried forward to next year. The interest on borrowing taken by states under this option will have to be paid by them from their resources. The principal on the amount borrowed under the option, after the transition period, will be paid from the proceeds of the Cess. The States will not be required to repay the principal from any other source.

Also, To the extent of the shortfall arising due to implementation of GST (i.e. Rs. 97,000 crores approximately in aggregate) the borrowing will not be treated as debt of the State for any norms which may be prescribed by the Finance Commission.

The Compensation Cess will be continued after the transition period until such time as all arrears of compensation for the transition period are paid to the states. The first charge on the future Cess would be the principal repayment. The remaining arrears of compensation accrued during the transition period would be paid after the principal is paid.

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News Network
December 3,2025

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IndiGo, India’s largest airline, is battling one of its worst operational disruptions in recent years, with hundreds of delays and cancellations throwing domestic travel into chaos.

Government data on Tuesday showed its on-time performance plunging to 35%, an unusual dip for a carrier long associated with punctuality.

By Wednesday afternoon, airports in Delhi, Mumbai, Bengaluru and Hyderabad had collectively reported close to 200 cancellations, stranding travellers across the country.

Crew Shortage After New Duty Norms

A major trigger behind the meltdown is a severe crew shortage, especially among pilots, following the rollout of revised Flight Duty Time Limitation (FDTL) norms last month.

The rules mandate longer rest hours and more humane rosters — a shift IndiGo has struggled to incorporate across its vast network.

Sources said several flights were grounded due to lack of cabin crew, while some delays stretched upwards of eight hours.

With IndiGo controlling over 60% of India’s domestic aviation market, the ripple effect has impacted airports nationwide.

IndiGo Issues Apology, Lists “Compounding Factors”

In a statement, IndiGo acknowledged the large-scale disruption:

“We sincerely apologise to customers. A series of unforeseen operational challenges — technology glitches, winter schedule changes, adverse weather, system congestion and updated FDTL norms — created a compounding impact that could not have been anticipated.”

To stabilise operations, the airline has begun calibrated schedule adjustments for the next 48 hours, aiming to restore punctuality. Affected passengers are being offered refunds or alternate travel arrangements, IndiGo said.

What the FDTL Rules Require

The FDTL norms, designed to reduce pilot fatigue, cap duty and flying hours as follows:
•    Maximum 8 hours of flying per day
•    35 hours per week
•    125 hours per month
•    1,000 hours per year

Crew must also receive rest equalling twice the flight duration, with a minimum 10-hour rest period in any 24-hour window.

The DGCA introduced these limits to enhance flight safety.

Hyderabad: 33 Flights Cancelled, Long Queues Reported

Hyderabad’s Rajiv Gandhi International Airport saw heavy early-morning crowds as 33 IndiGo flights (arrivals and departures) were cancelled.

The airport clarified on X that operations were normal, advising passengers to contact IndiGo directly for latest flight status.

Cancellations included flights to and from Visakhapatnam, Goa, Ahmedabad, Delhi, Bengaluru, Chennai, Madurai, Hubli, Bhopal and Bhubaneswar.

Bengaluru: 42 Flights Disrupted

Bengaluru’s Kempegowda International Airport recorded 42 cancellations — 22 arrivals and 20 departures — affecting routes to Delhi, Mumbai, Chennai, Hyderabad, Goa, Kolkata and Lucknow.

Passengers Vent on Social Media

Irate travellers took to X to share their experiences. One passenger stranded in Hyderabad wrote: “I have been here since 3 a.m. and missed an important meeting.”

Another said: “My flight was pushed from 1:55 PM to 2:55 PM and now 4:35 PM. I was informed only three minutes before entering the airport.”

Delhi Airport Hit by Tech Glitch

At Delhi Airport, the disruption deepened due to a slowdown in the Amadeus system — used for reservations, check-ins and departure control.

The technical issue led to longer queues and sluggish processing, adding to delays already worsened by staff shortages.

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News Network
December 5,2025

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New Delhi, Dec 5: IndiGo CEO Pieter Elbers issued a public apology this evening after more than a thousand flights were cancelled today, making it the "most severely impacted day" in terms of cancellations. The biggest airline of the country cancelled "more than half" of its daily number of flights on Friday, said Elbers. He also said that even though the crisis will persist on Saturday, the airline anticipates fewer than 1,000 flight cancellations.

"Full normalisation is expected between December 10 and 15, though IndiGo cautions that recovery will take time due to the scale of operations," the IndiGo CEO said. 

IndiGo operates around 2,300 domestic and international flights daily.

Pieter Elbers, while apologising for the major inconvenience due to delays and cancellations, said the situation is a result of various causes.

The crisis at IndiGo stems from new regulations that boost pilots' weekly rest requirements by 12 hours to 48 and allow only two night-time landings per week, down from six. IndiGo has attributed the mass cancellations to "misjudgment and planning gaps".

Elbers also listed three lines of action that the airline will adopt to address the issue.

"Firstly, customer communication and addressing your needs, for this, messages have been sent on social media. And just now, a more detailed communication with information, refunds, cancellations and other customer support measures was sent," he said.

The airline has also stepped up its call centre capacity.

"Secondly, due to yesterday's situation, we had customers stranded mostly at the nation's largest airports. Our focus was for all of them to be able to travel today itself, which will be achieved. For this, we also ask customers whose flights are cancelled not to come to the airports as notifications are sent," the CEO said.

"Thirdly, cancellations were made for today to align our crew and planes to be where they need to start tomorrow morning afresh. Earlier measures of the last few days, regrettable, have proven not to be enough, but we have decided today to reboot all our systems and schedules, resulting in the highest numbers of cancellations so far, but imperative for progressive improvements starting from tomorrow," he added.

As airports witnessed chaotic scenes, the Directorate General of Civil Aviation (DGCA) stepped in to grant IndiGo a temporary exemption from stricter night duty rules for pilots. It also allowed substitution of leaves with a weekly rest period. 

Civil Aviation Minister Ram Mohan Naidu has said a high-level inquiry will be ordered and accountability will be fixed.

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News Network
December 4,2025

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Domestic carrier IndiGo has cancelled over 180 flights from three major airports — Mumbai, Delhi and Bengaluru — on Thursday, December 4, as the airline struggles to secure the required crew to operate its flights in the wake of new flight-duty and rest-period norms for pilots.

While the number of cancellations at Mumbai airport stands at 86 (41 arrivals and 45 departures) for the day, at Bengaluru, 73 flights have been cancelled, including 41 arrivals, according to a PTI report that quoted sources.

"IndiGo cancelled over 180 flights on Thursday at three airports-Mumbai, Delhi and Bengaluru," the source told the news agency.

Besides, it had cancelled as many as 33 flights at Delhi airport for Thursday, the source said, adding, "The number of cancellations is expected to be higher by the end of the day."

The Gurugram-based airline's On-Time Performance (OTP) nosedived to 19.7 per cent at six key airports — Delhi, Mumbai, Chennai, Kolkata, Bengaluru and Hyderabad — on December 3, as it struggled to get the required crew to operate its services, down from almost half of December 2, when it was 35 per cent.

"IndiGo has been facing acute crew shortage since the implementation of the second phase of the FDTL (Flight Duty Time Limitations) norms, leading to cancellations and huge delays in its operations across the airports," a source had told PTI on Wednesday.

Chaos continued at several major airports for the third day on Thursday because of the cancellations.

A spokesperson for the Kempegowda International Airport (KIA) in Bengaluru said that 73 IndiGo flights had been cancelled on Thursday.

At least 150 flights were cancelled and dozens of others delayed on Wednesday, airport sources said, leaving thousands of travellers stranded, according to news agency Reuters.

The Directorate General of Civil Aviation (DGCA) has said it is investigating IndiGo flight disruptions and has asked the airline to submit the reasons for the current situation, as well as its plans to reduce flight cancellations and delays.

It may be mentioned here that the pilots' body, Federation of Indian Pilots (FIP), has alleged that IndiGo, despite getting a two-year preparatory window before the full implementation of new flight duty and rest period norms for cockpit crew, "inexplicably" adopted a "hiring freeze".

The FIP said it has urged the safety regulator, the DGCA, not to approve airlines' seasonal flight schedules unless they have adequate staff to operate their services "safely and reliably" in accordance with the New Flight Duty Time Limitations (FDTL) norms.

In a letter to the DGCA late on Wednesday, the FIP urged the DGCA to consider re-evaluating and reallocating slots to other airlines, which have the capacity to operate them without disruption during the peak holiday and fog season if IndiGo continues to "fail in delivering on its commitments to passengers due to its own avoidable staffing shortages."

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