IGI Logo

Credit rating agency ICRA in its latest report has said that the states may face a shortfall of Rs 2.7-3 lakh crore as Goods and Services Tax (GST) compensation from the Centre next fiscal. Out of that amount, the shortfall from cess collections will be at Rs 1.6-2 lakh crore. In FY21, the states were facing a shortfall of Rs 1.1 lakh crore in GST compensation from the Centre but over 90 per cent of that amount has been cleared now.

According to the report, the shortfall will force states to borrow at least Rs 2.2 lakh crore more from the market, which means that they will have to utilise as much as 90 per cent of their enhanced borrowing limits in FY22.  It has estimated the states' projected revenues at Rs 8.7 lakh crore next fiscal, which is 14 per cent higher than Rs 7.7 lakh crore in FY21.

The agency said the numbers are based on an estimate by the agency for all the 31 states and the Union Territories on a base case scenario of 23 per cent growth in GST collection by the states, which is in line with the Central estimate as well. Based on this, it expects the SGST collections by all the 31 states and UTs at Rs 5.7 lakh crore in FY22. The gap between the estimated projected revenue and SGST collections is pegged at Rs 3 lakh crore.