New Delhi [India], July 15 (ANI): The Finance Ministry on Thursday released Rs 75,000 crore to the States and Union Territories (UTs) with legislature under the back-to-back loan facility in lieu of Goods and Services Tax (GST) compensation.
The release is in addition to normal GST compensation being released every 2 months out of actual cess collection.
Subsequent to the 43rd GST Council Meeting held on May 28, 2021, it was decided that the Central Government would borrow Rs 1.59 lakh crore and release it to States and UTs with Legislature on a back-to-back basis to meet the resource gap due to the short release of Compensation on account of the inadequate amount in the Compensation Fund.
This amount is as per the principles adopted for a similar facility in FY 2020-21, where an amount of Rs 1.10 lakh crore was released to States under a similar arrangement. This amount of Rs 1.59 lakh crore would be over and above the compensation, in excess of Rs 1 lakh crore (based on cess collection) that is estimated to be released to States/UTs with Legislature during this financial year. The sum total of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 2021-22.
According to the Ministry, all eligible States and UTs (with Legislature) have agreed to the arrangements of funding of the compensation shortfall under the back-to-back loan facility.
For assisting the States and UTs in their endeavour, the Ministry has frontloaded the release of assistance under the back-to-back loan facility during FY 2021-22 Rs 75, 000 crore (almost 50 per cent of the total shortfall for the entire year) released today in a single instalment.
The balance amount will be released in the second half of 2021-22 in steady instalments, the ministry said.
The release of Rs 75,000 crore being made now is funded from borrowings of the Government of India in 5-year securities, totalling Rs 68,500 crore and 2-year securities for Rs 6,500 crore issued in the current financial year, at a Weighted Average Yield of 5.60 and 4.25 per cent per annum respectively. (ANI)