8th Instalment of ₹ 6,000 crore released to the States as back to back loan to meet the GST compensation shortfall

A total amount of ₹ 48,000 crore released so far to all States and UTs with legislation

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

The Ministry of Finance has released the 8^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, 14^th December, 2020 and 21^st December, 2020.

The amount released this week was the 8^th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.1902%.  So far, an amount of ₹ 48,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.6986%. 

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 21.12.2020(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	1181.61
2	Arunachal Pradesh*	143	0.00
3	Assam	1869	508.48
4	Bihar	3231	1996.34
5	Chhattisgarh	1792	507.78
6	Goa	446	429.39
7	Gujarat	8704	4715.01
8	Haryana	4293	2225.19
9	Himachal Pradesh	877	877.91
10	Jharkhand	1765	275.85
11	Karnataka	9018	6343.77
12	Kerala	4,522	1269.96
13	Madhya Pradesh	4746	2322.35
14	Maharashtra	15394	6124.17
15	Manipur*	151	0.00
16	Meghalaya	194	57.19
17	Mizoram*	132	0.00
18	Nagaland*	157	0.00
19	Odisha	2858	1954.21
20	Punjab	3033	1841.04
21	Rajasthan	5462	1659.07
22	Sikkim*	156	0.00
23	Tamil Nadu	9627	3191.24
24	Telangana	5017	688.59
25	Tripura	297	115.80
26	Uttar Pradesh	9703	3071.33
27	Uttarakhand	1405	1184.37
28	West Bengal	6787	975.91
	Total (A):	106830	43516.56
1	Delhi	Not applicable	2998.70
2	Jammu & Kashmir	Not applicable	1161.60
3	Puducherry	Not applicable	323.14
	Total (B):	Not applicable	4483.44
	Grand Total (A+B)	106830	48000.00

* These States have ‘NIL’ GST compensation gap

GST compensation loans released to states as back-to-back borrowing to meet revenue shortfall and additional borrowing permission granted. The central government released an eighth weekly instalment of back-to-back loans through a special borrowing window to meet GST compensation shortfalls, passing funds to 23 States and three Union Territories while five States reported no gap. The latest tranche was raised at an interest rate of 4.1902%, contributing to an aggregate borrowing of forty-eight thousand crore at an average interest rate of 4.6986%. Additionally, permission to borrow an amount equivalent to 0.50% of GSDP was granted to 28 States under the prescribed option to address the compensation shortfall.