15th instalment of Rs 6,000 crore released to States to meet GST compensation shortfall
New Delhi, February 13, 2021
The Ministry of Finance through the Department of Expenditure has released the 15th weekly instalment of Rs 6,000 crore to the States to meet the Goods & Service Tax (GST) compensation shortfall.
Out of this, Rs 5,516.60 crore has been released to 23 States and Rs 483.40 crore has been released to the three 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.
Till now, 81% of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of Rs 82,132.76 crore has been released to the States and Rs 7,867.24 crore to the three UTs with 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 Union Government on behalf of the States and UTs. It has completed 15 rounds of borrowings so far starting from October 23, 2020.
The amount released this week was the 15th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.5288%. So far, Rs 90,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7921%.
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 % 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 given their preference for Option-I. Permission for borrowing the entire additional amount of Rs 1,06,830 crore (0.50 % of GSDP) has been granted to 28 States under this provision.