Economy

States, UTs get 16th instalment of GST shortfall compensation

Our Bureau New Delhi | Updated on February 15, 2021

Centre has released 86 per cent of the estimated loss in revenue

Finance Ministry on Monday released 16th weekly instalment of ₹5,000 crore to the States today to meet the GST compensation shortfall. Further, additional borrowing permission of over ₹1.06 lakh crore was granted to the States

Centre set up a special borrowing window in October, 2020 to meet the estimated shortfall of ₹1.10-lakh crore in revenue due to GST implementation.

The borrowings are being done through this window by the Centre on behalf of the States and Union Territories..

Out of the present instalment, ₹4,597.16 crore has been released to 23 States and ₹402.84 crore to the three UTs with Legislative Assembly (Delhi, Puducherry and Jammu & Kashmir) who are members of the GST Council. The remaining five States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a shortfall.

86 per cent released

Till now, 86 percent of the total estimated GST compensation has been released including ₹86,729.93 crore to the States and ₹8,270.07 crore to the three UTs. The latest tranche has been borrowed at an interest rate of 4.65 per cent, So far, ₹95,000 crore has been borrowed by the Central government through the special borrowing window at an average interest rate of 4.78 per cent.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue, 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 the option to meet GST compensation shortfall to help them in mobilising additional financial resources.

Additional borrowing

Permission for borrowing the entire additional amount of over ₹1,06 lakh crore has been granted to 28 States under this provision with all States opting for it.

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Published on February 15, 2021
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