Rs 1.06 Lakh crore GST compensation shortfall released to states
New Delhi: The Ministry of Finance, Department of Expenditure has released the 19th weekly instalment of Rs. 2,104 crore to the States to meet the GST compensation shortfall. Out of this, an amount of Rs. 2,103.95 crore has been released to 7 States and an amount of Rs. 0.05 crore has been released to the Union Territory of Puducherry.
Till now, 96 percent of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of Rs. 97,242.03 crore has been released to the States and an amount of Rs. 8,861.97 crore has been released to the 3 UTs with 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 implementation of GST. The borrowings are being done through this window by the Government of India on behalf of the States and UTs. 19 rounds of borrowings have been completed so far starting from 23rd October, 2020.
Under the special window, the Government of India has been borrowing in Government Stock with tenure of 3 years and 5 years. The borrowing made under each tenure is equally divided among all the States as per their GST compensation shortfall. With the current release, the proportionate pending GST shortfall with respect to borrowing under 5 years tenor has been concluded for 23 States and 3 UTs with legislature. Remaining 5 States have not GST compensation shortfall.
The amount released this week was the 19th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.8594%. So far, an amount of Rs. 1,06,104 crore has been borrowed by the Central Government through the special borrowing window at an weighted average interest rate of 4.8842%.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, 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-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.
The amount of additional borrowing permission granted to 28 States and the amount of funds raised through special window and released to the States and Union Territories so far is annexed.