Odisha gets second tranche of GST compensation

BHUBANESWAR: The State government on Tuesday received Rs  287.12 crore in second installment of GST compensation under the Special Borrowing Window. 

The Centre had released Rs  6,000 crore in the second tranche to 16 states and three Union Territories to meet the GST collection shortfall. Of Rs  12,000 crore released by the Ministry of Finance in two tranches under the special window so far to the states and UTs, Odisha has got Rs  576.92 crore. On October 23, it had received Rs  289.8 crore.

The amount has been borrowed by the Centre at an interest rate of 4.42 per cent, lower than the cost of borrowings for the states and UTs. Apart from the loan amount, the Centre had also released Rs  20,000 crore directly from the cess fund from which Odisha had received Rs  492 crore as GST compensation for the 2020-21 fiscal.

Principal Secretary, Finance department Ashok K Meena said, the State has received Rs  1069 crore of compensation amount out of around Rs  5116 crore due till the end of September. 

“Nearly Rs  4047 crore of GST compensation still pending with the Centre is expected in coming months. Even raised through market borrowing by the Centre, the State would neither pay the principal nor the interest. It will be adjusted from the collection in the future and accordingly, we have submitted an undertaking,” he said.

Odisha is one of the 21 states which opted for Option 1 of the two choices provided by the Centre for borrowing to meet the GST shortfall caused by Covid-19 pandemic.

Under Option-I, the states will have no obligation to pay the interest and principal and are eligible to carry forward their unutilised borrowing space to the next financial year.

Last month, the Centre had confirmed that an estimated Rs  1.1 lakh crore will be borrowed in appropriate tranches and passed on to the states and UTs as back-to-back loan in lieu of GST compensation cess releases.

Besides, the Centre has also allowed additional borrowing of 0.5 per cent of the Gross State Domestic Product (GSDP) to meet the shortfall in GST collections and under this provision, Odisha has got the nod to borrow around Rs  2858 crore in the fiscal.