New Delhi, Oct 28 (IANS): The Centre on Thursday said it has released Rs 44,000 crore to the state governments and UTs (with Legislature) under the back-to-back loan facility in lieu of GST Compensation.
"After taking into account earlier release of Rs 115,000 crore, total amount released in the current financial year as back-to-back loan in-lieu of GST compensation is Rs 159,000 crore," the Ministry of Finanace said in a statement.
"This release is in addition to normal GST compensation being released every 2 months out of actual cess collection."
According to the ministry, subsequent to the 43rd 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 Legislature on a back-to-back basis to meet the resource gap due to the short release of Compensation on account of inadequate amount 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 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 or 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."
As per the statement, 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.
"The release of Rs 44,000 crore being made now is funded from borrowings of GoI in 5-year securities issued in the current financial year, at a 'Weighted Average Yield' of 5.69 per cent. No additional market borrowing by central government is envisaged on account of this release."
"It is expected that this release will help the States or UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects."