Source: BS Businessworld
As the compensation in collection of goods and services tax falls short the Centre releases the 14th instalment of Rs 6,000 crore to states as a back-to-back loan to meet it, taking the total amount released so far through the special borrowing window to Rs 84,000 crore. As of now, 76% of the estimated GST compensation shortfall has been released to the states & UT with legislative assembly.The amount was borrowed at an interest rate of 4.6144%, while the average interest rate was 4.7395%.
The Centre had offered the state two borrowing options i.e. Rs 97,000 crore and Rs 2.35 lakh crore with different sets of conditions for each to meet the GST compensation shortfall. The Centre sweetened the first option by increasing the borrowing to Rs 1.1 lakh crore. Some states earlier declined to take any of the options but later chose the first option. The Centre had also set up a special borrowing window in October 2020 to meet the estimated shortfall arising on account of implementation of GST.