GST compensation shortfall released to states reaches Rs 1.06 lakh crore

at 1:56 pm
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New Delhi (NVI): The Ministry of Finance has released the 19th weekly instalment of Rs 2,104 crore to the States and UTs to meet the goods and services tax (GST) shortfall, taking the total amount of compensation released to Rs 1.6 lakh crore.

According to an official statement, out of this weekly instalments, an amount of Rs 2,103.95 crore has been released to 7 States and an amount of Rs 0.05 crore has been released to the Union Territory of Puducherry.

About 96 percent of the total estimated GST compensation shortfall has been released to the States and UTs with Legislative Assembly till now.

“Out of this, an amount of Rs 97,242.03 crore has been released to the states and an amount of Rs 8,861.97 crore has been released to the 3 UTs with Legislative Assembly,” the Finance Ministry said in a statement.

The government had set up a special borrowing window in October last year to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST, the statement said.

It added that the borrowings are being done through this window by the Government of India on behalf of the States and UTs. These borrowings have completed 19 rounds of so far starting from October 23 last year.

The ministry further stated that under the special window, the Centre 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,” it added.

Moreover, the amount released this week was the 19th instalment of such funds provided to the States, while the amount been borrowed this week at an interest rate of 5.8594 per cent.

So far, an amount of Rs 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 per cent.

“In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the government has 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,” the statement read.

However, all the states have given their preference for Option-I and permission for borrowing the entire additional amount of Rs 1,06,830 crore (0.50 per cent of GSDP) has been granted to 28 States under this provision.