• Help Line: +91-8178908220, +91-8920931648
  • Login

Rs 75,000 crore released to States and UTs with Legislature

  • 15 Jul 2021
  • Garima
  • 395

Ministry of Finance has released today Rs75,000 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 43rd GST Council Meeting held on May 28, 2021, it was decided that the Central Government would borrow Rs1.59 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 the 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 Rs1.10 lakh crore was released to States under a similar arrangement. This amount of Rs1.59 lakh crore would be over and above the compensation in excess of Rs1 lakh crore(based on cess collection), which is estimated to be released to States/UTs with Legislature during this financial year. The sum total of Rs2.59 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, the Ministry of Finance has frontloaded the release of assistance under the back-to-back loan facility during FY 2021-22 Rs75,000 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 Rs75,000 crore being made now is funded from borrowings of GoI in 5-year securities, totalling Rs68,500 crore and 2-year securities for Rs6,500 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  July 15, 2021. Check the link below.

Source- https://www.pib.gov.in/PressReleasePage.aspx?PRID=1735935

whatsup