BackStates’ GST shortfall rises to ₹2.4 trillion in April-Nov
The GST revenue gap of states this fiscal will far surpass the previous estimate of about ₹2.35 trillion for the full yearThe Union government will raise a total of ₹1.1 trillion and pass it on to states this fiscal to help them meet part of the revenue gap
PremiumThe shortfall in goods and services tax (GST) revenues of states has risen to ₹2.46 trillion during the April to November period of this fiscal, according to official data.
To partly meet the revenue gap, the Centre has given ₹40,000 crore as compensation for April-May 2020 from GST cess collections and facilitated loans worth ₹84,000 crore under a special borrowing window, minister of state for finance Anurag Singh Thakur informed the Rajya Sabha on Tuesday.
This shows that the GST revenue gap of states this fiscal will far surpass the previous estimate of about ₹2.35 trillion for the full year. The minister said the GST compensation fund was insufficient to meet the entire compensation requirement due to lower tax collections as well as cess receipts.
Large state economies such as Delhi, Maharashtra, Gujarat, Karnataka, Uttar Pradesh and Tamil Nadu saw a major hit to their revenues due to the pandemic-induced economic recession and have managed to partly bridge the gap with the special borrowing programme. The Union government will raise a total of ₹1.1 trillion and pass it on to states this fiscal to help them meet part of the revenue gap.
States have also been allowed higher borrowing limits—5% of gross state domestic product (GSDP) as part of the Centre’s economic response to the pandemic, compared to 3% earlier.
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