Govt Releases Eleventh Instalment Of Rs 6,000 Crore To States, UTs To Meet GST Compensation Shortfall

The Union Finance Ministry has released the eleventh weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and an amount of Rs 483.40 crore has been released to the 3 Union Territories (UTs) 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 Finance ministry said in a statement on Monday (11 January).

Now, 60 per cent of the estimated GST compensation shortfall has been released to the states and UTs with a Legislative Assembly. Out of this, Rs 60,066.36 crore has been released to the states and an amount of Rs 5,933.64 crore has been released to the 3 UTs with Legislative Assembly.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST. The borrowings are being done through this window by the government on behalf of the states and UTs. The borrowings have been done in 11 rounds.

The amount released this week was the 11th instalment of such funds provided to the states. The amount has been borrowed this week at an interest rate of 5.1057 per cent.

So far, an amount of Rs 66,000 crore has been borrowed by the Centre through the special borrowing window at an average interest rate of 4.7271 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 1 to meet GST compensation shortfall to help them in mobilising additional financial resources. All the states have now given their preference for Option 1. 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.