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GST compensation to states: Centre releases Rs 6,000 crore as second tranche to 16 states, 3 UTs | India Business News – Times of India

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NEW DELHI: The government on Monday released Rs 6,000 crore as second tranche of GST compensation shortfall to 16 states and 3 union territories (UTs), the ministry of finance said in an official statement.
Till date, the finance ministry has facilitated loans of Rs 12,000 crore under the special window to states and UTs.
The amount will be passed on to them at the same interest rate, which is lower than the cost of borrowings for the states and UTs, thus benefitting them.
The Centre had on October 23 transferred Rs 6,000 crore to 16 states and 2 UTs of Delhi and Jammu and Kashmir as part of its first tranche of transfer to states.
“The ministry of finance, government of India, under its ‘Special Window to states for meeting the GST compensation Cess shortfall,’ will be releasing an amount of Rs 6,000 crore as second tranche to 16 States and 3 Union Territories today,” the statement said.

This borrowing was done at an interest of 4.42 per cent, which is lower than the cost of borrowings for the states and UTs, thus benefitting them, it added.
Giving in to the demands of the opposition-ruled states to borrow and fund the GST shortfall, last month, the government had decided to borrow the estimated shortfall of Rs 1.1 lakh crore on behalf of states and act as an intermediary to arrange back-to-back loans for them.
It had evolved a special borrowing window to address the shortfall in GST collection during the year 2020-21. This special window was opted for by twenty-one states and three union territories.
“The loans raised by government are released on a back-to-back basis to states/UTs, in lieu of GST compensation cess releases. The loans have been released to the following states and union territories – Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand, UT of Delhi, UT of Jammu and Kashmir and UT of Puducherry,” the statement said.

The Centre had in August proposed two options to states: Borrow Rs 97,000 crore (on account of GST implementation) from a special window facilitated by the RBI or the complete shortfall of Rs 2.35 lakh crore (including Rs 1.38 lakh crore due to COVID) from the market.
The options have since been revised to Rs 1.10 lakh crore and Rs 1.8 lakh crore, respectively.
(With agency inputs)



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