GST shortfall: Centre releases 8th instalment of Rs 6,000 crore to states

The Ministry of Finance on Monday said it has released the eighth weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall caused by the COVID-19 pandemic. 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 (Delhi, Jammu and Kashmir, and Puducherry) who are members of the GST Council. A total amount of Rs 48,000 crore has been released so far to all these states and UTs.

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

The central government had set up a special borrowing window in October to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST. The borrowings have been done in 7 rounds so far through this window by the Centre on behalf of the states and UTs.

The amount borrowed so far was released to the states on October 23, November 2, November 9, November 23, December 1, December 7, December 14, and December 21.

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The eighth instalment of the fund released this week has been borrowed at an interest rate of 4.1902 per cent. 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 4.698 per cent.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre 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 the states have been 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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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 annexed.

By Chitranjan Kumar