Center releases Rs 40,000 crore as back-to-back loans to states to make up for shortfall in GST

New Delhi: The Center on Thursday released Rs 40,000 crore to states and union territories to compensate for shortfall in GST revenue, taking the total amount released as loans so far this fiscal to Rs 1.15 lakh crore.

“The Finance Ministry today released an amount of Rs 40,000 crore to States and UTs under back-to-back credit facility to meet shortfall in GST compensation.

“Earlier on July 15, 2021, an amount of Rs 75,000 crore was released to the states and union territories with the legislature. With the current release, the current financial year released in the form of back-to-back loans against GST. The total amount of compensation done has reached to Rs 1.15 lakh crore.”

It said the Center has proceeded to release the assistance under the back-to-back credit facility, with over 72 per cent of the total estimated shortfall for the full year of Rs 1.59 lakh crore released so far. The balance amount will be released in due course. This release of funds in the form of back-to-back loans is in addition to the bi-monthly GST compensation to be released from cess collection.

In the 43rd GST Council meeting on May 28, 2021, it was decided that the central government would borrow Rs 1.59 lakh crore in 2021-22 and release it on a back-to-back basis to the states and union territories to address the shortage of resources. be completed. Short release of compensation due to insufficient amount collected in the Compensation Fund. (Also read: Alia Bhatt invests in IIT-Kanpur-backed startup, check out other startups backed by the actor)

This amount is in accordance with the principles adopted for a similar facility in 2020-21, where an amount of Rs 1.10 lakh crore was released to the states under similar arrangement.

An amount of Rs 1.59 lakh crore to be provided as back-to-back loan to the states will be over and above the compensation of Rs 1 lakh crore (based on cess collection) that will be released to the states/UTs. Estimates. with the legislature during the current financial year. A total amount of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation in 2021-22,” the statement said.

All eligible states and union territories (along with the legislature) have agreed to arrange for compensation shortfall financing under a back-to-back credit facility. (Also read: Bank of Baroda slashed interest rate on home loans: Check & compare latest rates with SBI, LIC)

“The release of Rs 40,000 crore made today is funded by Government of India borrowings in 5-year securities, for a total of Rs 23,500 crore and Rs 16,500 crore issued in the current financial year for 2-year securities, weighted of 5.69 and 4.16. on average return. Percentage per annum respectively. No additional market borrowing is envisaged by the Central Government on account of this release,” the statement said.

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