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Finance Ministry releases weekly instalment of Rs 6,000 crore to states to meet GST compensation shortfall

Finance Ministry releases weekly instalment of Rs 6,000 crore to states to meet GST compensation shortfall
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Finance Ministry releases weekly instalment of Rs 6,000 crore to states to meet GST compensation shortfall

Highlights

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

The Ministry of Finance 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 over Rs 5,516.60 crore has been released to 23 States while an amount of Rs 483.40 crore to the three Union Territories of Delhi, Jammu and Kashmir and Puducherry.

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 the Legislative Assembly. The Finance Ministry in a statement said that 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 Central Government on behalf of the States and UTs.

The amount has been borrowed this week at an interest rate of 4.15 per cent. So far, an amount of Rs 60,000 crore has been borrowed by the Central Government.

The amount released this week was the 10th instalment of such funds provided to the States. The amount borrowed under the special window so far was released to the states on October 23, November 2, November 9, November 23, December 1, December 7, December 14, December 21, December 28, 2020, and January 4, 2021.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent of gross state domestic product (GSDP) to the states to help them in mobilising more financial resources.

It said, this is in addition to additional borrowing permission of Rs 1,06,830 crore (0.50 per cent of GSDP) granted to the states.

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