States receive first installment of GST compensation, Center transfers 6000 crores
Last week, the Center accepted the demand of states ruled by opposition parties regarding GST compensation. Their demand was that the Center take compensation for the GST of the states by taking loans themselves.
After all the disputes, the central government has given the first installment of GST compensation to the states. According to the information given by the Finance Ministry, the central government has transferred Rs 6,000 crore to 16 states and two union territories including Maharashtra, Gujarat, Bihar,Assam, Delhi and Jammu and Kashmir
The ministry said in a statement, “The central government has issued a loan of Rs 6,000 crore to 16 states today. These 16 states are … Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand. Apart from this, funds have also been transferred to two union territories Delhi and Jammu Kashmir.
The central government has taken a loan at 5.19% interest. In
fact, last week the Center accepted the demand of states ruled by opposition parties regarding GST compensation. Their demand was that the Center itself compensate the GST of the states by taking loans.
According to the statement of the Finance Ministry, this loan is taken at 5.19 percent interest and its duration is broadly for 3 to 5 years. The ministry said that it will release Rs 6,000 crore to the states every week. The Finance Ministry said that this arrangement will not affect the fiscal deficit of the Center and it will be displayed as the capital gain of the state governments.
The options given in August were to state
that the Center had given two options to the states in August regarding GST compensation. Firstly, to meet the shortfall in revenue collection due to GST implementation, take 97,000 crore rupees from RBI’s special window or take a total of 2.35 lakh crore rupees (1.38 lakh crore rupees due to Kovid crisis) from the market. This amount has been revised to Rs 1.10 lakh crore and Rs 1.8 lakh crore respectively.