Centre releases fund to meet GST shortfall; Nagaland out of ambit
Kohima/Dimapur, Jan. 5 (EMN): The Ministry of Finance has released the 10th instalment of INR 6,000 crore to the states as back-to-back loan to meet the GST compensation shortfall.
This is in addition to additional borrowing permission of INR 1,06,830 crore granted to the states.
So far, a total amount of INR 60,000 crore has been released to all states and UTs with legislation. Out of this, an amount of INR 5,516.60 crore has been released to 23 states and an amount of INR 483.40 crore has been released to three Union Territories (UTs) with Legislative Assembly (Delhi, Jammu & Kashmir and Puducherry) that are members of the GST Council, according to PIB.
The remaining five states — Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim — do not have a gap in revenue on account of GST implementation.
More than 50 per cent of the estimated GST compensation shortfall has been released to the states and UTs with Legislative Assembly.
The Government of India had set up a special borrowing window in October 2020 to meet the estimated shortfall of INR 1.10 lakh crore in revenue arising on account of GST implementation. The Centre, on behalf of the States and UTs, does the borrowings through this window.
The borrowings have been done in 10 rounds and were released to the states- once in October 2020, thrice in November, five times in December, and once on January 4 2021.
The amount released this week was the 10th instalment of such funds provided to the states and it had been borrowed at an interest rate of 4.1526%. So far, an amount of INR 60,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.6892%.
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 been given their preference for Option-I, according to the update.
Permission for borrowing the entire additional amount of INR 1,06,830 crore (0.50% of GSDP) has been granted to 28 states under this provision, it added.