Home Finance Odisha Gets 286 Cr GST Compensation

Odisha Gets 286 Cr GST Compensation

Bhubaneswar: State on Wednesday received Rs.286 crore towards GST Compensation as the Union Government has released funds.

Last month the State received Rs.1617.65 crore as GST Compensation.

The Centre has released GST Compensation of Rs. 17,000 crore to states on Wednesday.

Last October, the Union Government had released Rs.40,000 crore in this regard in the country.

The total amount of compensation released to the States and Union Territories (UT) s so far including the aforesaid amount during the year 2021-22 is Rs. 60,000 crore.

The release of Rs.40,000 crore made earlier was funded from borrowings of GoI in 5-year securities, totalling Rs.23,500 crores and  2-year securities for Rs.16,500 crore issued in the current financial year, at a Weighted Average Yield of 5.69 and 4.16 percent per annum respectively.  

No additional market borrowing by the Central Government is envisaged on account of this release.

It is expected that this release will help the States/UTs in planning their public expenditure among other things, for improving health infrastructure and taking up infrastructure projects.

As per the decision of GST Council, back to back loan of Rs.1.59 lakh crore has already been released in lieu of shortfall in release of GST Compensation during the current financial year.

Earlier on 15 July, 2021 an amount of Rs.75,000 crore was released to the States & UTs with legislature.

Subsequent to the 43rd GST Council Meeting held on 28 May 2021, 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 FY 2020-21, where an amount of Rs.1.10 lakh crore was released to 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/UTs with Legislature during the current financial year.

The sum total of ₹2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 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.

For assisting the States/UTs in their endeavour, the Ministry of Finance has frontloaded the release of assistance under the back-to-back loan facility during FY 2021-22 of ₹1,15,000 crore (more than 72 percent of the total estimated shortfall for the entire year).

The balance amount will be released in due course.