11th Instalment of ₹ 6,000 crore released to the States as back to back loan to meet the GST compensation shortfall

A total amount of ₹ 66,000 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 11^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. Now, 60 percent of the estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. Out of this an amount of ₹ 60,066.36 crore has been released to the States and an amount of ₹ 5,933.64 crore has been released to the 3 UTs with Legislative Assembly.

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 borrowings are being done through this window by the Government of India on behalf of the States and UTs.  The borrowings have been done in 11 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,  21^st December, 2020, 28^th December, 2020, 04^th January, 2021and 11^th January, 2021.

The amount released this week was the 11^th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.1057%. So far, an amount of ₹ 66,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.7271%. 

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 11.01.2021

(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	1559.07
2	Arunachal Pradesh*	143	0.00
3	Assam	1869	670.84
4	Bihar	3231	2634.14
5	Chhattisgarh	1792	1015.56
6	Goa	446	566.58
7	Gujarat	8704	6221.22
8	Haryana	4293	2935.98
9	Himachal Pradesh	877	1158.35
10	Jharkhand	1765	551.70
11	Karnataka	9018	8370.15
12	Kerala	4,522	2211.72
13	Madhya Pradesh	4746	3064.19
14	Maharashtra	15394	8080.35
15	Manipur*	151	0.00
16	Meghalaya	194	75.49
17	Mizoram*	132	0.00
18	Nagaland*	157	0.00
19	Odisha	2858	2578.45
20	Punjab	3033	3206.28
21	Rajasthan	5462	2411.02
22	Sikkim*	156	0.00
23	Tamil Nadu	9627	4210.58
24	Telangana	5017	1077.30
25	Tripura	297	152.70
26	Uttar Pradesh	9703	4052.45
27	Uttarakhand	1405	1562.64
28	West Bengal	6787	1699.60
	Total (A):	106830	60066.36
1	Delhi	Not applicable	3956.63
2	Jammu & Kashmir	Not applicable	1532.67
3	Puducherry	Not applicable	444.34
	Total (B):	Not applicable	5933.64
	Grand Total (A+B)	106830	66000.00

* These States have ‘NIL’ GST compensation gap

Back-to-back loan facility used to meet GST compensation shortfall, releasing multiple instalments and additional borrowing permissions. The Central Government released an eleventh weekly instalment under a back-to-back loan arrangement, transferring proceeds of Centre-borrowings to States and UTs with legislatures to address GST compensation shortfalls. Borrowings have been effected via a special borrowing window in multiple rounds since October 2020 at specified interest rates, with aggregate amounts and the share released to each State and three UTs reported. Separately, an additional borrowing permission equivalent to 0.50% of GSDP has been granted to States choosing the designated option, with 28 States permitted to borrow the full additional amount.