Home >News >India >GST compensation: Govt transfers second tranche of 6,000 cr to 16 states, 3 UTs
The Finance Ministry under its Special Window to states for meeting the GST Compensation Cess shortfall, will be releasing an amount of  ₹6k cr as 2nd tranche to 16 states and 3 UTs today. (Reuters)
The Finance Ministry under its Special Window to states for meeting the GST Compensation Cess shortfall, will be releasing an amount of 6k cr as 2nd tranche to 16 states and 3 UTs today. (Reuters)

GST compensation: Govt transfers second tranche of 6,000 cr to 16 states, 3 UTs

The states and UTs that received the second tranche of GST compensation are AP, Assam, Bihar, Goa, Gujarat, Haryana, HP, Karnataka, MP, Maharashtra, Meghalaya, Odisha, TN, Tripura, UP, Uttarakhand, UT of Delhi, UT of J&K and UT of Puducherry

In a bid to bridge the Goods and Services Tax (GST) revenue shortfall, the Modi government has borrowed and transferred 6,000 crore as the second tranche to 16 states and three union territories under a special borrowing window, the Finance Ministry said on Monday.

"The Ministry of Finance, Government of India, under its Special Window to States for meeting the GST Compensation Cess shortfall, will be releasing an amount of 6000 crore as second tranche to 16 States and 3 Union Territories today," the MoF said in a statement.

The 16 states and three union territories that received funds are Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand, UT of Delhi, UT of Jammu and Kashmir and UT of Puducherry.

"This amount was raised at a weighted average yield of 4.42 per cent," the statement added.

It further said that this amount will be passed on to the States or UTs at the same interest rate, which is lower than the cost of borrowings for the States and UTs, thus benefitting them. "Ministry of Finance has facilitated loans of 12,000 crore till date under the Special Window to States/UTs," it said.

Twenty one states and 3 union territories so far, have opted for the Special Window under Option 1. "The loans raised by government are released on a back-to-back basis to States/UTs, in lieu of GST Compensation Cess releases," the MoF stated.

Earlier on 23 October, the central government has borrowed and transferred an amount of 6,000 crore as the first tranche to 16 states and two union territories. The interest rate was fixed at 5.19%.

The finance ministry also said that the Centre is likely to make weekly releases of 6,000 crore to states.

The facilities available to the states who choose Option-1 inter-alia include:

1) A special borrowing window, coordinated by the Ministry of Finance to borrow the amount of shortfall in revenue through issue of debt. The total shortfall in the revenue of the states on this account has been estimated at around 1.1 lakh crore.

2) Permission to borrow the final instalment of 0.5% of GSDP out of the 2% additional borrowings permitted by the Government of India in view of the COVID pandemic, waiving the reforms condition.

The government will borrow 1.1 lakh crore under the special window to meet the shortfall of GST compensation, the finance ministry earlier stated . The total shortfall in collection of GST estimated at 2.35 lakh crore. Out of the total shortfall, 1.1 lakh crore is on account of GST shortfall.

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