Policy

Centre releases ₹44,000 cr to states as last tranche of back-to-back loan for GST shortfall

Our Bureau New Delhi | Updated on October 28, 2021

With this, the total payout under this arrangement reached ₹1.59 lakh crore.

The Finance Ministry on Thursday released the balance of ₹44,000 crore to the States and three Union Territories with legislatures as loan to compensate for the GST compensation shortfall. With this, the total payout under this arrangement reached ₹1.59 lakh crore.

This release of funds as back-to-back loans is in addition to the bi-monthly GST compensation being released out of cess collection. The Ministry had on July 15 and October 7 released ₹75,000 crore and ₹40,000 crore respectively to the States and UTs.

This amount of ₹1.59 lakh crore would be over and above the compensation, in excess of ₹1 lakh crore (based on cess collection), which is estimated to be released to States/UTs with Legislature during this financial year. "The sum total of ₹2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 2021-22," the Ministry said.

The release of ₹44,000 crore being made now is funded from borrowings of GoI in 5-year securities issued in the current financial year, at a Weighted Average Yield of 5.69 per cent. No additional market borrowing by Central Government is envisaged on account of this release.

"It is expected that this release will help the States/UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects," it said.

Published on October 28, 2021

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