Ninth Installment to Meet GST Compensation Shortfall Released

The Central government has released the 9th installment of GST compensation payment to the states. This installment is Rs 6,000 crore.

Key Points

• So far, the states and union territories have received Rs 54,000 crore out of the total Rs 1.1 lakh crore that has to be disbursed by the central government in this financial year.
• Under option 1 of borrowing for GST shortfall, the central government borrows the funds under a special window and then provides it to states through a loan arrangement.
• The interest rate for the latest loan installment was 5.15%. So far, the average rate for the entire borrowing is 4.74%.
• In this round of weekly installment, Twenty-three states have been allotted Rs 5,516.6 crore and Rs 483.4 crore has been allotted to the 3 union territories with legislative assembly- Puducherry, Delhi, and Jammu & Kashmir.
• The remaining 5 states i.e. Nagaland, Arunachal Pradesh, Mizoram, Manipur, and Sikkim do not have a gap in revenue on account of GST implementation.

Background

The borrowing plan for GST shortfall was notified by the government in October 2020 wherein the government said that it will borrow for GST shortfall of 1.1 lakh crore. Earlier, the states and UTs were given two options wherein most of the states chose option 1. At present, all the states have chosen option 1 for the borrowing plan. The government has also given additional borrowing permission of 0.50% of Gross States Domestic Product (GSDP) to the states choosing option 1.