The Finance Ministry on Saturday said that ₹1-lakh crore of GST compensation shortfall has been released to 28 States and three Union Territories (with legislatures). This covers 91 per cent of estimated shortfall of ₹1.10-lakh crore during the current fiscal (2020-21) on account of GST implementation.

On Friday, the Finance Ministry released the 17th weekly instalment of ₹5,000 crore to States. Of this, ₹4,730.41 crore has been released to 23 States and ₹269.59 crore to three Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), and that are members of the GST Council. The remaining five States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

Till now, 91 per cent of the total estimated GST compensation shortfall has been released to States and UTs with Legislative Assembly. Ohis, ₹91,460.34 crore has been released to the States and ₹8,539.66 crore to the 3 UTs with the Legislative Assembly.

The Centre had set up a special borrowing window in October, 2020 to meet the estimated shortfall of ₹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. 17 rounds of borrowings have been completed so far starting from October 23. Under the special window, the Government of India has been borrowing in Government Stock with tenor of three and five years. The borrowing made under each tenor 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 the five-year tenure has been concluded for 16 States and two UTs. These States/ UTs were onboard for GST compensation release from the first instalment.

The amount released this week was the 17th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.59 per cent. So far, an amount of ₹1-lakh crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.83 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 ₹1,06,830 crore (0.50 per cent of GSDP) has been granted to 28 States under this provision.

State-wise distribution

(₹ in crore)

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