IGI Logo

The Finance Ministry has released the final weekly instalment of Rs 4,104 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 4,086.97 crore has been released to 23 states and Rs 17.03 crore to 3 Union Territories with Legislative Assemblies.

With the current release, 100 percent of the total estimated GST compensation shortfall of Rs 1.10 lakh crore for year 2020-21 has now been released to the states and UTs with Legislative Assemblies.

Out of this, an amount of Rs 101,329 crore has been released to the states and Rs 8,879 crore to the 3 UTs with Legislative Assemblies.

The Central 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.

Starting from October 23, 2020, the borrowings were completed in 20 weekly instalments.

Under the special window, the Centre has been borrowing in government stock with tenure of 3 years and 5 years.

The borrowings made under each tenure are 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 both 5 years tenure and 3 year tenure has been concluded for 23 states and 3 UTs with legislatures. The remaining five states doesn't have any GST compensation shortfall.

The amount released this week was the 20th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.9288 per cent. The total amount of Rs 1,10,208 crore has been borrowed by the Central government through the special borrowing window at an weighted average interest rate of 4.8473 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 had 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) was granted to 28 states under this provision.