GST Compensation: Centre to transfer Rs 6,000 crore to 16 states, 3 UTs
The Finance Ministry has declared that it will transfer Rs 6,000 crore as the second tranche of GST compensation shortfall to 16 states and 3 Union Territories including Maharashtra, Bihar, Assam, Puducherry, and Delhi.
Also Read | Birthday Special: Know SRK’s most loved dialogues
On October 23, the Centre had transferred Rs. 6,000 crore to 16 states and 2 UTs of Delhi and Jammu and Kashmir.
In the second tranche of transfer, the Union Territory of Puducherry has been included.
"The Ministry of Finance, Government of India, under its 'Special Window to States for meeting the GST Compensation Cess shortfall,' will be releasing a number of Rs 6,000 crore as second tranche to 16 States and 3 Union Territories today," the ministry said.
This borrowing was done at an interest of 4.42 percent, which is lower than the cost of borrowings for the states and UTs, thus benefitting them, it added.
"Ministry of Finance has facilitated loans of Rs 12,000 crore to date under the Special Window to States/UTs," it added.
21 states and 3 Union Territories to date, have opted for the Special Window and the loans raised by the Centre would be 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, Delhi, Jammu and Kashmir and Puducherry.
Last month, the Centre gave in to the demands of opposition ruled states to borrow and fund the GST compensation shortfall.
The Finance Ministry said that the Centre would borrow from the market to pay the GST compensation shortfall of Rs 1.1 lakh crore to states, and then act as an intermediary to arrange back-to-back loans to state governments.
Also Read | 550th Prakash Purb: Punjab CM directs depts. to complete pending works
This arrangement will not reflect in the fiscal deficit of the Centre and will appear as capital receipts for state governments.
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 1.83 lakh crore, respectively.
-PTC News
