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States receive 17th tranche of Rs 5,000Cr to meet GST shortfall

By TIOL News Service

NEW DELHI, FEB 20, 2021: THE Ministry of Finance on Friday released the 17th tranche of the weekly instalments of Rs. 5,000 crore to the States, meeting nearly 91 per cent of the estimated shortfall arising from the implementation of the Goods and Services Tax (GST), so far.

An amount of Rs. 4,730.41 crore has been released to 23 States and an amount of Rs. 269.59 crore has been released to the three Union Territories (UTs) of Delhi, Jammu and Kashmir, and Puducherry. The amount borrowed this week was at an interest rate of 5.5924 per cent.

The remaining five States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation, said the ministry.

"Till now, 91 per cent of the total estimated GST compensation shortfall has been released to the States and UTs. Out of this, an amount of Rs. 91,460.34 crore has been released to the States and an amount of Rs. 8,539.66 crore has been released to the three UTs," it added.

The government had set up a special borrowing window in October, 2020 to meet the estimated shortfall of Rs. 1.10 lakh crore in revenue arising on account of implementation of GST. So far, an amount of Rs. 1 lakh crore has been borrowed by the Central government at an average interest rate of 4.8307 per cent.

The government has been borrowing in government stock with tenor of three years and five years. The borrowing made under each tenor is equally divided among all the States as per their GST shortfall.

"With the current release, the proportionate pending GST shortfall with respect to borrowing under 5 years tenure has been concluded for 16 States and two UTs. These States/UTs were onboard for GST compensation release from the first instalment," explained the ministry.

In addition, the government also granted additional borrowing permission equivalent to 0.50 per cent of the Gross States Domestic Product (GSDP), Rs. 1,06,830 crore, to the 28 States.


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