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Rs 6,000 Crore Released to States to Meet GST Compensation Shortfall

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The Union Finance Ministry has released the 10th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and an amount of Rs 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council.

The remaining five states — Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim — do not have a gap in revenue on account of GST implementation. Now, more than 50 per cent of the estimated GST compensation shortfall has been released to the states and UTs with a Legislative Assembly.

The government had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST. The borrowings are being done through this window by the Centre on behalf of the states and UTs.

The borrowings have been done in 10 rounds. The amount borrowed so far was released to the states in 10 rounds on – October 23, November 2, 9, 23, December 1, 7, 14, 21 and 28 and now on January 4.

The amount has been borrowed this week at an interest rate of 4.1526 per cent.

So far, an amount of Rs 60,000 crore has been borrowed by the government through the special borrowing window at an average interest rate of 4.6892 per cent.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the government has also granted additional borrowing permission equivalent to 0.50 per cent of Gross States Domestic Product (GSDP) to the states choosing Option 1 to meet GST compensation shortfall to help them in mobilising additional financial resources.

All the states have been given their preference for Option 1. Permission for borrowing the entire additional amount of Rs 1,06,830 crore (0.50 per cent of GSDP) has been granted to 28 states under this provision.

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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