GST compensation: Centre transfers 15th tranche of Rs 6,000 crore to states

The Centre released the 15th instalment of Rs 6,000 crore to states on Friday, February 12, to meet the GST compensation shortfall.

This takes the total amount released so far through the special borrowing window to Rs 90,000 crore, the Finance Ministry said, adding that this is in addition to additional borrowing permission of Rs 1,06,830 crore granted to the states.

"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 three union territories (UTs) with legislative assemblies (Delhi, Jammu and Kashmir, and Puducherry) who are members of the GST Council," the ministry said.

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"The remaining 5 states, Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim do not have a gap in revenue on account of GST implementation," it added.

The ministry further stated that so far, 81 per cent of the total estimated GST compensation shortfall has been released to the states and UTs with legislative assemblies.

"Out of this, an amount of Rs 82,132.76 crore has been released to the states and an amount of Rs 7,867.24 crore has been released to the three UTs with legislative assemblies," it noted.

The government 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 the implementation of GST. The borrowings are being done through this window by the Centre on behalf of the states and UTs. 15 rounds of borrowings have been completed so far, starting October 23, 2020.

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"The amount released this week was the 15th instalment of such funds provided to the states. The amount has been borrowed this week at an interest rate of 5.5288 per cent. So far, an amount of Rs 90,000 crore has been borrowed by the central government through the special borrowing window at an average interest rate of 4.7921 per cent," the ministry said.

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.

All states have given their preference for Option-I. 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.

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