Indian Economy and Issues Relating to Planning, Mobilization, of Resources, Growth, Development and Employment.

GS-3

1.GST COMPENSATION SHORTFALL

12th instalment of Rs. 6,000 crore released to the states as back to back loan to meet the GST compensation shortfall.

IMPORTANT POINTS:

The Government of India had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 Lakh crore in revenue arising on account of implementation of GST.
The borrowings are being done through this window by the Government of India on behalf of the States and UTs.
12 rounds of borrowings have been completed so far starting from October 2020.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources.
All the States have given their preference for Option-I.
The Ministry of Finance, Department of Expenditure has released the 12th weekly instalment of Rs. 6,000 crore to the states to meet the GST compensation shortfall.
The amount has been given to 23 states and 3 UTs who are members of the GST Council.
The remaining 5 states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.