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Home / News / India /  GST compensation shortfall: Govt releases 6,000 crore to 23 States, 3 UTs

The Finance Ministry has released the weekly installment of 6,000 crore to the States to meet the GST compensation shortfall on Wednesday.

Out of this, an amount of 5,516.60 crore has been released to 23 States and an amount of 483.40 crore has been released to the 3 Union Territories with Legislative Assembly (Delhi, Jammu & Kashmir and Puducherry) who are members of the GST Council.

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

The Centre is borrowing this amount on behalf of the States and UTs through a special borrowing window to meet the estimated shortfall of 1.10 lakh crore in revenue arising on account of GST implementation.

The amount released this week was the 6th installment of such funds provided to the States.

The amount has been borrowed this week at an interest rate of 4.2089%.

Earlier on Saturday, the government said that all states and three Union Territories have picked the first of the two options to receive compensation on account of implementation of GST.

Under the plan selected by states, the central government will borrow 1.10 lakh crore from the market, to meet the states' revenue shortfall.

The remaining shortfall of 73,000 crore is estimated to be due to the coronavirus pandemic.

Jharkhand became the latest state to go for Option 1, the Finance Ministry said in a press release. The state will receive 1,689 crore through a special borrowing window to meet the GST shortfall.

So far, an amount of 36,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7106%.

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 0.5% of States' GSDP to the states choosing option-I to meet GST compensation shortfall to help them in mobilising additional financial resources.

So far, permission for borrowing an additional amount of 1,06,830 crore has been granted to 28 States under this provision.

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.

State-wise additional borrowing of 0.50% of GSDP allowed and amount of funds raised through special window passed on to the States/UTs till 9 December.

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