The Finance Ministry has today released Rs 75,000 crore to the states and union territories (with legislature) under the back-to-back loan facility in lieu of GST compensation.
Of the total amount of Rs 75,000 crore, Meghalaya got Rs 66.51 crore. This comprises Rs 60.75 crore under the five-year tenor and Rs 5.76 crore under the two-year tenor.
This release is in addition to normal GST compensation being released every two months out of actual cess collection.
The release of the amount being made now is funded from borrowings of Government of India in five-year securities, totalling Rs 68,500 crore and two-year securities for Rs 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 and union territories in planning their public expenditure among other things, for improving health infrastructure and taking up infrastructure projects.
The Centre said that for effective response and management of Covid-19 pandemic and a step-up in capital expenditure all states and union territories have a very important role to play.
It may be noted that following the 43rd GST Council Meeting held on May 28 this year, it was decided that the Central government would borrow Rs 1.59 lakh crore and release it to states and union territories (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 of Rs 1.59 lakh crore would be over and above the compensation in excess of Rs 1 lakh crore (based on cess collection) that is estimated to be released to states and union territories with legislature during this financial year.
The sum total of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation accruing in Financial Year 2021-22.
All eligible states and union territories (with legislature) have agreed to the arrangements of funding of the compensation shortfall under the back-to-back loan facility.
