GST shortfall Govt may have to borrow $22 billion more to pay states
India may need to borrow more for a second straight year to compensate its states for their revenue loss due to a shortfall in the GST collection, according to people with knowledge of the matter.
The additional borrowing requirement is estimated at Rs 1.58 lakh crore ($21.7 billion) in the fiscal year started April 1, said the people, who asked not to be identified citing rules. A panel on goods and services tax will meet on Friday to discuss compensation to states, among other issues.
The amount is part of the compensation that the Central government agreed to pay states for any revenue loss on account of the introduction of a nationwide GST. But the economic downturn caused by the world’s worst coronavirus outbreak risks hurting tax collection, possibly forcing the administration to consider additional borrowings.
