The Centre has released Rs 35.47 crore to Meghalaya under the back-to-back loan facility to meet the shortfall in GST compensation.
The amount was released three days ago by the Union Finance Ministry.
Of the total amount, the fund released to the State under five-year tenor was Rs 20.84 crore while the amount for two-year tenor was Rs 14.63 crore.
It may be noted that the Finance Ministry released an amount of Rs 40,000 crore to the states and Union Territories (UTs) with legislature under the back-to-back loan facility to meet the shortfall in GST compensation.
Earlier on July 15, an amount of Rs 75,000 crore was released to the states and UTs with legislature.
With the current release, the total amount released in the current financial year as back to back loan in-lieu of GST compensation has reached to Rs 1,15,000 crore. This release is in addition to normal GST compensation being released every two months out of actual cess collection.
Subsequent to the 43rd GST Council Meeting held on May 28, it has been decided by the Central government that it would borrow Rs 1.59 lakh crore in 2021-22 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 collected in the Compensation Fund. This amount is as per the principles adopted for a similar facility in Financial Year 2020-21, where an amount of Rs 1.10 lakh crore was released to the states under a similar arrangement.
This amount of Rs 1.59 lakh crore to be provided to states as back to back loan 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 UTs with legislature during the current 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 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.
It is expected that this release will help the states and UTs in planning their public expenditure among other things, for improving health infrastructure and taking up infrastructure projects.
For assisting the states and UTs in their endeavour, the Finance Ministry has frontloaded the release of assistance under the back-to-back loan facility during Financial Year 2021-22 of Rs 1,15,000 crore (more than 72 per cent of the total estimated shortfall for the entire year). The balance amount will be released in due course.
