Bhubaneswar: Odisha Government has received Back to Back Loan in lieu of GST Compensation amounting Rs.3033.10 Crore.
While the Union Government has released Rs.75,000 Crore to all the States and Union Territories having Legislatures, in two Break Up the State Government has received Rs. 2770.23 Crore and Rs.262.87 Crore on 15 July, 2021.
In FY 2020-21 total Back to Back Loan in lieu of GST Compensation was Rs.3822.00 crore.
The Centre has estimated the shortfall in GST compensation payable to the states in the current fiscal at Rs 2.59 lakh crore, of which about Rs 1.59 lakh crore would have to be borrowed this year.
The Centre expects to collect over Rs 1 lakh crore through cess on luxury, demerit and sin goods, which will be given to the states to compensate them for the shortfall in revenue arising out of the GST implementation.
Hence, the remaining Rs 1.59 lakh crore would have to be borrowed to meet the promised compensation to states under the Goods and Services Tax (GST) regime.
The Ministry said in the 28 May GST Council meeting, it was decided that the central government would borrow Rs 1.59 lakh crore and release it to states and UTs with the 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 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/UTs 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 FY 2021-22,” the Ministry said.
All eligible states and UTs (with the legislature) have agreed to the arrangements for the funding of the compensation shortfall under the back-to-back loan facility, the Ministry said.
“For effective response and management of Covid 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, Ministry of Finance has front-loaded the release of assistance under the back-to-back loan facility during FY 2021-22 Rs 75,000 crore (almost 50 percent of the total shortfall for the entire year) released today in a single installment. The balance amount will be released in the second half of 2021-22 in steady installments,” it added.
The release of Rs 75,000 crore being made now is funded from borrowings of the Centre in 5-year securities, totaling Rs 68,500 crore and 2-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.