Published On: Mon, Dec 28th, 2020

Centre releases Rs 6K cr loan to states to meet GST compensation shortfall

New Delhi: The Finance Ministry has released the ninth weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

The government had set up a special borrowing window in October 2020 to meet the estimated 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 three Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir and Puducherry) who are members of the GST Council. The remaining 5 states — Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim — do not have a gap in revenue on account of GST implementation.

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 9 rounds. The amount borrowed so far was released to the States on October 23, November 2, November 9, November 23, December 1, December 7, December 14, December 21 and December 28.

The amount released this week was the 9th instalment of such funds provided to the states. The amount has been borrowed this week at an interest rate of 5.1508 per cent.

So far, an amount of Rs 54,000 crore has been borrowed by the Central government through the special borrowing window at an average interest rate of 4.7488 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-I 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 lakh crore (0.50 per cent of GSDP) has been granted to 28 states under this provision.

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