GST compensation shortfall released to States reaches ₹ 1.06 lakh crore

GST compensation shortfall released to States reaches ₹ 1.06 lakh crore

19th Instalment of ₹ 2,104 crore released to the States on Monday, 08th March, 2021

96 per cent of the estimated shortfall of ₹ 1.10 lakh crore released

The Ministry of Finance, Department of Expenditure has released the 19^th weekly instalment of ₹ 2,104 crore to the States to meet the GST compensation shortfall. Out of this, an amount of ₹ 2,103.95 crore has been released to 7 States and an amount of ₹ 0.05 crore has been released to the Union Territory of Puducherry.

Till now, 96 percent of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of ₹ 97,242.03 crore has been released to the States and an amount of ₹ 8,861.97 crore has been released to the 3 UTs with Legislative Assembly.

The Government of India had 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 borrowings are being done through this window by the Government of India on behalf of the States and UTs. 19 rounds of borrowings have been completed so far starting from 23^rd October, 2020.

Under the special window, the Government of India has been borrowing in Government Stock with tenure of 3 years and 5 years. The borrowing made under each tenure is 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 5 years tenor has been concluded for 23 States and 3 UTs with legislature. Remaining 5 States have not GST compensation shortfall.

The amount released this week was the 19^th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.8594%. So far, an amount of ₹ 1,06,104 crore has been borrowed by the Central Government through the special borrowing window at an weighted average interest rate of 4.8842%. 

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-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 ₹ 1,06,830 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. 

State wise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the States/UTs till 08.03.2021

(Rs. in Crore)

* These States have ‘NIL’ GST compensation gap