The Ministry of Finance has released the weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall. Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and an amount of Rs 483.40 crore has been released to the three Union Territories (UT) with Legislative Assembly -- Delhi, Jammu & Kashmir and Puducherry -- who are members of the GST Council, said a Finance Ministry statement.
The remaining five 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 Rs 1.10 lakh crore in revenue arising on account of GST implementation.
The amount released this week was the sixth instalment of such funds provided to the states. The amount has been borrowed this week at an interest rate of 4.2089 per cent. So far, an amount of Rs 36,000 crore has been borrowed by the Central government through the special borrowing window at an average interest rate of 4.7106 per cent.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.5 per cent 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 Rs 1,06,830 crore has been granted to 28 states under this provision. The latest states to convey their acceptances were Jharkhand, Chhattisgarh, Punjab and Kerala. With Jharkhand being the latest, all states and Union Territories have now accepted the Union government’s proposal of it borrowing Rs 1.1 lakh crore and in turn ending the same to states as back to back loans to bridge the GST revenue shortfall.