₹ 75,000 crore released to States and UTs with Legislature as GST Compensation shortfall

Almost 50 % of the total shortfall for the entire year released in a single instalment

Ministry of Finance has released today ₹75,000 crore to the States and UTs with Legislature under the back-to-back loan facility in lieu of GST Compensation.  This release is in addition to normal GST compensation being released every 2 months out of actual cess collection.

Subsequent to the 43^rd GST Council Meeting held on 28.05.2021, it was decided that the Central Government would borrow ₹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 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 ₹1.10 lakh crore was released to States under a similar arrangement. This amount of ₹1.59 lakh crore would be over and above the compensation in excess of ₹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 ₹2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 2021-22.

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 effective response and management of COVID-19 pandemic and a step-up in capital expenditure all States and UTs have a very important role to play. For assisting the States/UTs in their endeavour, Ministry of Finance has frontloaded the release of assistance under the back-to-back loan facility during FY 2021-22 ₹75, 000 crore (almost 50 % 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 release of ₹75,000 crore being made now is funded from borrowings of GoI in 5-year securities, totalling ₹68,500 crore and 2-year securities for ₹6,500 crore issued in the current financial year, at a Weighted Average Yield of 5.60 and 4.25 percent per annum respectively. 

It is expected that this release will help the States/UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects.

State/ UTs wise amount released as “Back to Back Loan in lieu of GST Compensation Shortfall” on 15.07.2021

 (in Rs. Crore)

Sl. No.	Name of the State/ UTs	GST Compensation shortfall released
		5 year tenor	2 year tenor	Total
1.	Andhra Pradesh	1409.67	133.76	1543.43
2.	Assam	764.29	72.52	836.81
3.	Bihar	2936.53	278.65	3215.18
4.	Chhattisgarh	2139.06	202.98	2342.04
5.	Goa	364.91	34.63	399.54
6.	Gujarat	5618.00	533.10	6151.10
7.	Haryana	3185.55	302.28	3487.83
8.	Himachal Pradesh	1161.08	110.18	1271.26
9.	Jharkhand	1070.18	101.55	1171.73
10.	Karnataka	7801.86	740.31	8542.17
11.	Kerala	3765.01	357.26	4122.27
12.	Madhya Pradesh	3020.54	286.62	3307.16
13.	Maharashtra	5937.68	563.43	6501.11
14.	Meghalaya	60.75	5.76	66.51
15.	Odisha	2770.23	262.87	3033.10
16.	Punjab	5226.81	495.97	5722.78
17.	Rajasthan	3131.26	297.13	3428.39
18.	Tamil Nadu	3487.56	330.94	3818.50
19.	Telangana	1968.46	186.79	2155.25
20.	Tripura	172.76	16.39	189.15
21.	Uttar Pradesh	3506.94	332.78	3839.72
22.	Uttarakhand	1435.95	136.26	1572.21
23.	West Bengal	2768.07	262.66	3030.73
24.	UT of Delhi	2668.12	253.18	2921.30
25.	UT of Jammu & Kashmir	1656.54	157.19	1813.73
26.	UT of Puducherry	472.19	44.81	517.00
	Total:	68500.00	6500.00	75000.00

 

Back-to-back loan facility funds released to states to address GST compensation shortfall, enabling fiscal planning and health infrastructure Frontloaded disbursement to States and UTs with Legislature has been made under a back-to-back loan facility to address the GST compensation shortfall. The Central Government has borrowed in marketable securities of distinct tenors and yields and passed those funds to recipients on matching tenors, supplementing regular compensation releases from cess collections. All eligible recipients agreed to the arrangement; the instalmentary release supports near-term fiscal management, capital expenditure and COVID-19 related public health measures, with the remaining balance to be released in the second half of the financial year.