GUWAHATI: The Centre has borrowed and transferred Rs 6,000 crore as the first tranche of GST compensation shortfall to 16 states and two union territories, including Assam on Friday.
Last week, the Centre had given in to the demands of states to borrow and fund the GST compensation shortfall. The finance ministry said that the Centre would borrow from the market to pay the GST compensation shortfall of Rs 1.1 lakh crore to states.
The ministry added that the Centre would also act as an intermediary to arrange back-to-back loans to state governments.
In total, Centre to borrow Rs 1.1 lakh crore for meeting GST compensation shortfall.
The ministry said the government of India has evolved a special borrowing window to address the shortfall in the GST collection during the year 2020–2021. Twenty-one states and two union territories opted for this special window involving back-to-back borrowing coordinated by the ministry of finance.
Out of these, five states did not have any shortfall on account of GST compensation. The GST compensation cess to stay beyond June 2022 to help states
The finance ministry said the borrowing is at an interest rate of 5.19 percent and the tenor of borrowing is expected to be broadly in the range of 3 to 5 years, it intends to release Rs 6,000 crore to the states every week.