Centre releases ₹1 lakh crore GST compensation to states since Oct 2020

The Centre has released ₹1 lakh crore to states and UTs in four months since October 2020, to meet GST compensation shortfall, the Finance Ministry said on Saturday.

The ministry on Friday released the 17th weekly instalment of ₹5,000 crore to 23 states and 3 Union Territories (Delhi, Jammu & Kashmir & Puducherry), taking the total amount released so far under the special borrowing window set up in October last year to ₹1 lakh crore.

The remaining 5 states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim, do not have a gap in revenue on account of Goods and Services Tax (GST) implementation.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of ₹1.10 lakh crore in revenue arising on account of implementation of GST.

The borrowings are being done through this window by the Centre on behalf of states and UTs.

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Under the special window, the Centre has been borrowing in government stock with tenor of 3 years and 5 years. The borrowing made under each tenor is equally divided among all states as per their GST compensation shortfall.

With the current release, the proportionate pending GST shortfall with respect to borrowing under 5 years tenor has been concluded for 16 states and 2 UTs.

Till now, 91 per cent of the total estimated GST compensation shortfall has been released to states & UTs with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), the statement said.

"An amount of ₹1,00,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.83 per cent....Out of this, an amount of ₹91,460.34 crore has been released to states and an amount of Rs. 8,539.66 crore has been released to the 3 UTs with Legislative Assembly," it said.

Total 17 rounds of borrowings have been completed so far starting from October 23, 2020.