9th Instalment of ₹ 6,000 crore released to the States as back to back loan to meet the GST compensation shortfall

9th Instalment of ₹ 6,000 crore released to the States as back to back loan to meet the GST compensation shortfall.

A total amount of ₹ 54,000 crore released so far to all States and UTs with legislation

This is in addition to additional borrowing permission of ₹ 1,06,830 lakh crore granted to the States

The Ministry of Finance has released the 9^thweekly instalment of ₹ 6,000 crore to the States to meet the GST compensation shortfall. Out of this, an amount of ₹ 5,516.60 crore has been released to 23 States and an amount of ₹ 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

The Government of Indiahad set up a special borrowing window in October, 2020 to meet the estimated shortfall of ₹ 1.10 lakh crore in revenue arising on account of implementation of GST. The borrwoings are being done through this window by the Government of India on behalf of the States and UTs.  The borrowings have been done in 9 rounds. The amount borrowed so far was released to the States on 23^rd October, 2020, 2^nd November, 2020, 9^th November, 2020, 23^rd November, 2020, 1^st December, 2020, 7^th December, 2020, 14^th December, 2020, 21^st December, 2020 and 28^thDecember, 2020.

The amount released this week was the 9^th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.1508%.So far, an amount of ₹ 54,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7488%. 

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product(GSDP)to the states choosing Option-Ito meet GST compensation shortfall to help them in mobilising additional financial resources. All the States have been given their preference for Option-I. Permission for borrowing the entire additional amount of ₹ 1,06,830 lakh crore (0.50 % of GSDP) has been granted to 28 States under this provision.

The amount of additional borrowing permission granted to 28 States and the amount of funds raised through special window and released to the States and Union Territories so far is annexed.                                                                                            

Statewise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the States/UTs till 28.12.2020

(Rs. in Crore)

* These States have ‘NIL’ GST compensation gap