Centre releases 12th Instalment of Rs. 6,000 crore to States as back to back loan to meet the GST compensation shortfall.

A total amount of Rs. 72,000 crore released so far to all States and UTs with legislation

New Delhi: The Ministry of Finance, Department of Expenditure today released the 12^th weekly instalment of Rs. 6,000 crore to the States today to meet the GST compensation shortfall. Out of this, an amount of Rs. 5,516.60 crore was released to 23 States and an amount of Rs. 483.40 crore was 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.

Till now, 65 percent of the total estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. Out of this, an amount of Rs. 65,582.96 crore has been released to the States and an amount of Rs. 6,417.04 crore has been released to the 3 UTs with Legislative Assembly.

The amount had been borrowed this week at an interest rate of 4.4315%. So far, an amount of Rs.72,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7024%.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government had 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 had given their preference for Option-I. Permission for borrowing the entire additional amount of Rs.1,06,830 crore (0.50 % of GSDP) had been granted to 28 States under this provision.

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 implementation of GST. The borrowings are being done through this window by the Government of India on behalf of the States and UTs.  12 rounds of borrowings have been completed so far starting from 23^rd October, 2020.

State wise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the States/UTs till 18.01.2021