The Centre on Monday released the eighth instalment of ₹6,000 crore to the States to meet the GST compensation shortfall. This is based on the special arrangement where the Centre borrows from the market and then forwards it on back-to-back basis to the States.

According to a Finance Ministry statement, borrowing of the eighth instalment was done at an interest rate of 4.19 per cent. So far, ₹48,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7 per cent.

Also read: Centre extends deadline for States to complete reforms to avail additional borrowing

The Centre set up a special borrowing window in October 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. Now, out of ₹6,000 crore raised this week, an amount of ₹5,516.60 crore has been released to 23 States and an amount of ₹483.40 crore to three Union Territories (UTs) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), which are members of the GST Council.

Five States ―Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim ― do not have a gap in revenue on account of GST implementation.

Also read: States/UTs get 7th instalment of ₹6,000-crore loan

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 per cent of Gross States Domestic Product (GSDP) to the States choosing Option-I to meet GST compensation shortfall to help them mobilise additional financial resources. All the States have been 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.


Resource mobilisation

(₹ in crore)

* These States have ‘NIL’ GST compensation gap

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