7th Instalment of ₹ 6,000 crore released to the States as back to back loan to meet the GST compensation shortfall

A total amount of ₹ 42,000 crore released so far to all States and UTs with legislation

This is in addition to additional borrowing permission of ₹ 1,06,830 granted to the States

The Ministry of Finance has released the 7^th weekly instalment of ₹ 6,000 crore to the States to meet the GST compensation shortfall. Out of this, an amount of ₹ 5,516.60 crore has been released to 23 States and an amount of ₹ 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

The Government of India had set up a special borrowing window in October, 2020 to meet the estimated shortfall of ₹ 1.10 Lakh crore in revenue arising on account of implementation of GST. The borrwoings are being done through this window by the Government of India on behalf of the States and UTs.  The borrowings have been done in 7 rounds. The amount borrowed so far was released to the States on 23^rd October, 2020, 2^nd November, 2020, 9^th November, 2020, 23^rd November, 2020, 1^st December, 2020, 7^th December, 2020 and 14^th December, 2020.

The amount released this week was the 7^th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.1348%.  So far, an amount of ₹ 42,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7712%. 

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources. All the States have been given their preference for Option-I. Permission for borrowing the entire additional amount of ₹ 1,06,830 crore (0.50 % of GSDP) has been granted to 28 States under this provision.

The amount of additional borrowing permission granted to 28 States and the amount of funds raised through special window and released to the States and Union Territories so far is annexed.

State wise additional borrowing of 0.50 percent of GSDP allowed and amount of funds raised through special window passed on to the States/UTs till 14.12.2020

(Rs. in Crore)

S. No.	Name of State / UT	Additional borrowing of 0.50 percent allowed to States	Amount of fund raised through special window passed on to the States/ UTs
1	Andhra Pradesh	5051	1055.79
2	Arunachal Pradesh*	143	0.00
3	Assam	1869	454.36
4	Bihar	3231	1783.74
5	Chhattisgarh	1792	338.52
6	Goa	446	383.66
7	Gujarat	8704	4212.94
8	Haryana	4293	1988.26
9	Himachal Pradesh	877	784.43
10	Jharkhand	1765	183.90
11	Karnataka	9018	5668.31
12	Kerala	4,522	956.04
13	Madhya Pradesh	4746	2075.07
14	Maharashtra	15394	5472.11
15	Manipur*	151	0.00
16	Meghalaya	194	51.09
17	Mizoram*	132	0.00
18	Nagaland*	157	0.00
19	Odisha	2858	1746.13
20	Punjab	3033	1385.96
21	Rajasthan	5462	1408.42
22	Sikkim*	156	0.00
23	Tamil Nadu	9627	2851.46
24	Telangana	5017	559.02
25	Tripura	297	103.50
26	Uttar Pradesh	9703	2744.29
27	Uttarakhand	1405	1058.28
28	West Bengal	6787	734.68
	Total (A):	106830	37999.96
1	Delhi	Not applicable	2679.39
2	Jammu & Kashmir	Not applicable	1037.91
3	Puducherry	Not applicable	282.74
	Total (B):	Not applicable	4000.04
	Grand Total (A+B)	106830	42000.00

* These States have ‘NIL’ GST compensation gap

Special borrowing window for GST compensation: central government released back-to-back loans to states to meet shortfall. A special borrowing window was used by the Central Government to provide back-to-back loans to States and Union Territories with legislatures to meet GST compensation shortfalls; the seventh instalment was released on 14 December 2020, borrowed at an interest rate of 5.1348% with cumulative borrowings at an average 4.7712%. In addition, the Central Government granted additional borrowing permission equal to 0.50% of GSDP to States choosing Option I, and permissions for the aggregate additional amount were granted to 28 States; state-wise allocations and amounts passed through the special window are set out.