The finance ministry has released the 13th weekly instalment of Rs 6,000 crore to the states on Monday to meet the goods and services tax (GST) compensation deficit.
In total, Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore has been released three union territories with legislative assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining five states — Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in GST revenue.
Until now, 70 per cent of the total estimated GST compensation shortfall has been released to the states and union territories with legislative assembly. Among this, Rs 71,099.56 crore has been released to the states and Rs 6,900.44 crore has been released to the three union territories with legislative assembly.
The Union 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 implementation of GST. The borrowings are being done through this window by the Union government of India. Thirteen rounds of borrowings have been completed so far starting from October 23, 2020.
The amount released this week was the 13th instalment of such funds provided to the states. The amount has been borrowed this week at an interest rate of 5.31 per cent. Until now, Rs 78,000 crore has been borrowed by the Union government through the special borrowing window at an average interest rate of 4.75 per cent.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Union 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.