GST shortfall: Centre borrows, transfers Rs 6,000 crore to 16 states, two union territories

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The finance ministry said that the Centre would borrow from the market to pay the GST compensation shortfall of Rs 1.1 lakh crore to states, and then act as an intermediary to arrange back-to-back loans to state governments.

The Centre has borrowed and transferred Rs 6,000 crore as the first tranche of GST compensation shortfall to 16 states and two union territories, including Maharashtra, Gujarat, Bihar, Assam, Delhi and J&K, the finance ministry said on Friday. Last week, the Centre gave in to the demands of opposition-ruled states to borrow and fund the GST compensation shortfall.

The ministry said the government of India has evolved a special borrowing window to address the shortfall in the GST collection during the year 2020-2021. Twenty-one states and two union territories opted for this special window involving back-to-back borrowing coordinated by the Ministry of Finance.

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