16 states, 3 UTs to get Rs 6,000 cr more as GST compensation

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SME Times News Bureau | 03 Nov, 2020
To compensate for the Goods and Services Tax (GST) shortfall, the Central government has borrowed and will be transferring Rs 6,000 crore as the second tranche to 16 states and three Union Territories under special borrowing window, the Finance Ministry said on Monday.

This amount was raised at a weighted average yield of 4.42 per cent. The amount will be passed on to the states/UTs later in the day at the same interest rate, which is lower than the cost of borrowings for the states and UTs, thus benefitting them, it added.

With the release of second tranche, the Finance Ministry has facilitated loans of Rs 12,000 crore till date under the Special Window.

Out of the 21 states that opted for the borrowing scheme (option 1), five did not have any revenue shortfall to be compensated. States are expected to get, as onward lending by the Centre to them, an amount equivalent to Rs 1,10,000 crore in FY21. This is the amount of shortfall in compensation estimated by the Centre owing to GST.

The loans have been released to the following states and Union Territories - Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand, and the UTs of Delhi, Jammu and Kashmir, and Puducherry.