In a bid to address the shortfall in the GST collection during the current fiscal, the Centre has evolved a special borrowing window in which the ministry of finance has borrowed and transferred Rs 6,000 crore as the first tranche to 16 states and two union territories, including Assam, Maharashtra, Gujarat, Bihar, Delhi and J&K.
All these states and union territories have opted for this special window involving back-to-back borrowing coordinated by the ministry of finance.
However, of these, five states did not have any shortfall on account of GST compensation.
“Today, the central government borrowed and transferred Rs 6,000 crore as the first tranche to 16 states namely Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand and two union territories: UT of Delhi and UT of Jammu and Kashmir,” the ministry of finance said in a statement on Friday.
This arrangement, the ministry said, will not reflect in the fiscal deficit of the Centre and will appear as capital receipts for state governments.
The borrowing is at an interest rate of 5.19 per cent. The tenor of borrowing is expected to be broadly in the range of 3 to 5 years.
The Centre plans to make weekly releases of Rs 6,000 crore to the states.
As part of GST compensation settlement formula evolved by the Centre, it is to borrow close to Rs 1,10,000 crore this year for back to back transfers to states towards meeting their GST compensation.
The borrowing and its interest are to be settled from realisations on account of GST compensation cess. The GST Council has allowed levy of cess beyond the five year transition period ending June 2022 to clear all unmet compensation dues of states.
Last week, the Centre gave in to the demands of opposition-ruled states to borrow and fund the GST compensation shortfall. (With agencies inputs)