Finance Ministry today released Rs 44,000 crore to States, Union Territories for GST compensation
The Center on Thursday released the remaining Rs 44,000 crore as loans to states to compensate for the shortfall in GST, taking the total amount to Rs 1.59 lakh crore this fiscal. The release of funds in the form of back-to-back loans is in addition to the bi-monthly GST compensation being paid from cess collection.
In the 43rd GST Council meeting on May 28, 2021, it was decided that the Center will borrow Rs 1.59 lakh crore in 2021-22 and transfer it to states and union territories to meet the resource gap on a back-to-back basis with the legislature. will issue to. Shortfall in compensation due to insufficient amount collected in GST Compensation Fund.
This amount is in accordance with the principles adopted for a similar facility in the last financial year 2020-21, where Rs 1.10 lakh crore was released to the states. “Ministry of Finance has today released Rs 44,000 crore to States and Union Territories under back-to-back credit facility against GST compensation,” the ministry said in a statement.
The ministry had released Rs 75,000 crore and Rs 40,000 crore to the states on July 15 and October 7 respectively. With Rs 44,000 crore released on Thursday, the total amount released as back-to-back loans in lieu of GST compensation in the current financial year stands at Rs 1.59 lakh crore, the statement said.
This amount of Rs 1.59 lakh crore is over and above Rs 1 lakh crore (based on cess collection), in addition to compensation, which is estimated to be released with the legislature to the States/UTs during this financial year.
“The total amount of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation in FY 2021-22,” the ministry said.
The Rs 44,000 crore currently being issued is funded by the Government of India from securities issued in the current financial year at a weighted average return of 5.69 per cent. No additional market borrowing is envisaged by the Central Government on account of this release.
It is expected that this release will help the States/UTs to plan their public expenditure for improving health infrastructure and undertaking infrastructure projects, among other things.
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