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In order to meet the shortfall in GST Compensation, the Ministry of Finance has released an amount of Rs 40,000 crore to the States and UTs with Legislature under the back-to-back loan facility.  With the current release, the total amount released in the current financial year as back to back loan in-lieu of GST compensation has reached to Rs 1,15,000 crore. This release is in addition to normal GST compensation being released every 2 months out of actual cess collection.

All eligible States and UTs (with Legislature) have agreed to the arrangements of funding of the compensation shortfall under the back-to-back loan facility. For effective response and management of COVID-19 pandemic and a step-up in capital expenditure all States and UTs have a very important role to play.

For assisting the States/UTs in their endeavour, Ministry of Finance has frontloaded the release of assistance under the back-to-back loan facility during FY 2021-22 of Rs 1,15,000 crore (more than 72 percent of the total estimated shortfall for the entire year). The balance amount will be released in due course. This release will help the States/UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects.