GST compensation shortfall to states reaches Rs 1 lakh crore, Centre releases Rs 5,000 cr

The Ministry of Finance on Saturday informed that the Centre has released Rs 1 lakh crore as Goods and Services Tax (GST) compensation to the states and the Union Territories since October 2020. The Ministry on Friday released the 17th weekly instalment of Rs 5,000 crore to the 23 states and three UTs ( Delhi, Jammu and Kashmir and Puducherry) under the special borrowing window which was set up in October last year. 

Centre borrowed through a special loan facility

Ministry of Finance stated that the central government has borrowed an amount of Rs. 1,00,000 crore through the special loan facility at an interest rate of 4.83 percent on an average. Of this, an amount of Rs 91,460.34 crore has been released to the states and an amount of Rs 8,539.66 crore has been released for the three Union Territories. In the remaining five states Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim, there has been no difference in revenue due to the implementation of Goods and Services Tax (GST). The Centre has started a special facility to raise debt for the states in October 2020 to meet the projected shortfall of Rs 1.10 lakh crore in revenue due to the implementation of GST. 

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91% GST compensation shortfall released

Ministry of Finance further stated, "Till now, 91% of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of Rs. 91,460.34 crore has been released to the States and an amount of Rs. 8,539.66 crore has been released to the 3 UTs with Legislative Assembly. 17 rounds of borrowings have been completed so far starting from 23rd October, 2020. The amount released this week was the 17th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.5924%. So far, an amount of Rs. 1,00,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.8307%."

The amount of additional borrowing permission granted to 28 States and the amount of funds raised through a special window and released to the States and Union Territories so far is annexed. The Ministry of Finance also stated, "the Government of India has also granted additional borrowing permission equivalent to 0.50 % 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."

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