The Finance Ministry has released the 12th instalment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount released so far under this window to Rs 72,000 crore. 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 Goods and Services Tax (GST).
Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), who are members of the GST Council. The amount has been borrowed this week at an interest rate of 4.43 per cent. The ministry said ‘Till now, 65 per cent of the total estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. Out of this, an amount of Rs 65,582.96 crore has been released to the States and an amount of Rs 6,417.04 crore has been released to the 3 UTs with Legislative Assembly’. Thus, the total amount released so far in 12 instalments is Rs 72,000 crore at an average interest rate of 4.70 per cent.
The remaining five states -- Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim -- do not have a gap in revenue on account of GST implementation. 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 to help them in mobilising additional financial resources.