Centre Transfers First Tranche Of ₹ 6,000 Crore In GST Compensation To States

On Friday, the central government borrowed and transferred ₹ 6,000 crore on account of the goods and services tax (GST) offset to the states under the special loan scheme, the Finance Ministry said in a press release. The government borrowed the money at an interest rate of 5.19 percent. The term of the debt is expected to be in the range of 3 to 5 years, the ministry added.
“Today the Central Government borrowed and transferred 6 billion rupees as the first tranche to 16 states, namely Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha , Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhandand and two Union territories: UT Delhi and UT Jammu and Kashmir, “the Finance Ministry said in a press release.

GST Compensation To States


The central government had agreed last week to borrow up to ₹ 1.1 lakh crore on behalf of the states to cover the shortfall in GST collections.

Borrowing will not have any impact on the government’s fiscal deficit and the amounts will be reflected as the capital inflows of state governments and as part of the financing of their respective fiscal deficits.

A slowdown in the economy since last fiscal year has resulted in a drop in collections from the goods and services tax (GST), disrupting the budgets of states that had waived their right to collect local taxes such as sales tax. or VAT when the GST was introduced. in July 2017.

When the GST was introduced in July 2017, states were promised a 14 percent increase in revenue over their last tax revenue in the first five years of GST implementation.


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