Centre releases Rs 42,000 crore to states towards GST compensation shortfall

In its statement, the finance ministry said that Rs 6,000 crore has been released on Monday, the latest in a series of weekly instalments, of which Rs 5516.60 crore has been released to 23 states and Rs 483.40 crore has been released to three Union territories of Delhi, Jammu and Kashmir, Puducherry.

Published on: Dec 14, 2020, 20:25:17 IST

Hindustan Times, New Delhi | By Anonymous

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The Union finance ministry announced on Monday the central government has borrowed Rs 42,000 crore since October to meet the shortfall in Goods and Services Tax (GST) compensation to states. In its statement, the finance ministry said that Rs 6,000 crore has been released on Monday, the latest in a series of weekly instalments, of which Rs 5516.60 crore has been released to 23 states and Rs 483.40 crore has been released to three Union territories of Delhi, Jammu and Kashmir, Puducherry. Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim are the five remaining states with no gap in revenue, the ministry added.

A shortfall of Rs 1.10 lakh crore in revenue was estimated on account of implementation of GST following which a special borrowing window was enabled in October this year. The government would borrow through this special window on behalf of the states and UTs. Seven rounds of borrowing have been done since October and the amount borrowed in these rounds were released to the states on October 23, November 2, November 9, November 23, December 1, December 7, and December 14.

“The amount released this week was the 7th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.1348%. So far, an amount of Rs.42,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7712%,” the statement read.

Apart from the funds released through this special borrowing, states that pick option 1 to meet the GST compensation shortfall are also allowed to borrow funds equivalent to 0.5 per cent of their Gross States Domestic Product (GSDP). Also, the entire additional amount of Rs 106,830 crore (0.50 per cent of GSDP) could also be borrowed by the states under this provision, the statement said.

(With agency inputs)

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