New Delhi: On Monday, 21st December, the Ministry of Finance has released the 8th weekly installment of Rs. 6,000 crore to the states to meet the GST compensation shortfall. According to a press statement from the Finance Ministry, out of the installment, 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 (UT) with a Legislative Assembly (Delhi, Jammu & Kashmir, and 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 India 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 of India on behalf of the states and UTs. The borrowings have been done in 7 rounds. The amount borrowed so far was released to the states on 23rd October 2020, 2nd November 2020, 9th November 2020, 23rd November 2020, 1st December 2020, 7th December 2020, 14th December 2020 and 21st December 2020.
The Finance Ministry stated that the amount released this week was the 8th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.1902%. So far, an amount of Rs. 48,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.6986%.
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 0.5% 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. Permission for borrowing the entire additional amount of Rs. 1,06,830 crore (0.5% 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 provided in the table below.
State-wise additional borrowing of 0.5 percent of GSDP allowed and amount of funds raised through special window passed on to the States/UTs till 21st December 2020 (Rs. amounts in crore)
|S. No.||Name of State/UT||Additional borrowing of 0.5 percent allowed to States||Amount of funds raised through a special window passed on to the States/UTs|
|2.||Jammu & Kashmir||Not applicable||1161.60|
|Total (B):||Not applicable||4483.44|
|Grand Total (A+B)||106830||48000.00|
* These States have ‘NIL’ GST compensation gap
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