The Centre is willing to provide further borrowing flexibility to states to help break the deadlock and allow their participation in the new GST compensation formula put on the table.Government sources said that the unconditional borrowing limit for states could be raised by another 0.5 per cent if they agree on the new GST compensation options suggested by the Centre. Under Fiscal Responsibility and Budget Management (FRBM) Act, states are allowed to borrow up to three per cent of gross state domestic product (GSDP) to bridge the fiscal deficit. An additional, two per cent borrowings with both conditional and unconditional elements has been added recently under the Atmanirbhar Bharat package. With Covid-19 inflicted revenue shortfall and rising GST compensation load, the Centre has given new options to compensate states for shortfall in their revenue due to GST switchover. The two options given by the Centre under the Atmanirbhar Bharat package allows flexibility to the states to make additional borrowings to meet their shortfall in GST compensation.