New Delhi: The Ministry of Finance has released the 10th installment 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 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim do not have a gap in revenue on account of GST implementation.
Now, more than 50 percent of the estimated GST compensation shortfall has been released to the States & UT with the Legislative Assembly.
The Government of India 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 the implementation of GST.
The borrowings are being done through this window by the Government of India on behalf of the states and UTs. The borrowings have been done on 28th December. The amount borrowed so far was released to the States on the 23rd October 2020 installment, November 2020, 9th November 2020, 23rd November 2020, 1st December 2020, 7th December 2020, 14th December 2020, 21st December 2020, 28th December 2020, and 04th January 2021.
The amount released this week was the 10th installment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.1526%. So far, an amount of Rs.60,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.6892%.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST mobilizing action, 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-Ito to meet GST compensation shortfall to help them in mobilizing additional financial resources. All the States have been given their preference numbering-I. Permission for both rowing the entire additional amount of Rs.1,06,830 crore (0.50 % of GSDP) has been granted to 28 States under this provision.
The amount of additional borrowing permission granted to 28 States and the number of funds raised through the special window and released to the States and Union Territories so far is annexed.
(With PIB inputs)