Centre releases 16th weekly instalment of Rs5000cr to States to meet GST compensation shortfall

The Ministry of Finance, Department of Expenditure has released the 16th weekly instalment of Rs5,000cr to the States to meet the GST compensation shortfall. Out of this, an amount of Rs4,597.16cr has been released to 23 States and an amount of Rs402.84cr has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are membe Rs 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.

Key Highlights:

Till now, 86 percent of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of Rs86,729.93cr has been released to the States and an amount of Rs8,270.07cr has been released to the 3 UTs with Legislative Assembly.

The amount released this week was the 16th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.6480%. So far, an amount of Rs95,000cr has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7831%.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50 % 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 the States have given their preference for Option-I. Permission for borrowing the entire additional amount of Rs1,06,830cr (0.50 % of GSDP) has been granted to 28 States under the provision.