15th instalment of Rs 6K cr for GST compensation shortfall released

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SME Times News Bureau | 12 Feb, 2021
The Finance Ministry on Friday released the 15th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall, an official statement said.

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 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, 81 per cent of the total estimated GST compensation shortfall has been released to the states and UTs with Legislative Assembly. Out of this, an amount of Rs 82,132.76 crore has been released to the states and Rs 7,867.24 crore to the three 3 UTs.

The government 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 Centre on behalf of the states and UTs. 15 rounds of borrowings have been completed so far starting from October 23, 2020.

The amount released this week has been borrowed at an interest rate of 5.5288 per cent.

So far, an amount of Rs 90,000 crore has been borrowed by the Central government through the special borrowing window at an average interest rate of 4.7921 per cent.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent 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 per cent of GSDP) has been granted to 28 states under this provision.