To compensate the shortfall in the GST collection during the current financial year, the Centre has evolved a special borrowing window. The states and UTs were given with two options to choose. A part of its effort the ministry of finance has borrowed and transferred Rs 6,000 crore as the first tranche to 16 states and two union territories, including Assam, Maharashtra, Gujarat, Bihar, Delhi and J&K. These states and UTs have chosen the special window involving back-to-back borrowing supported by the Finance ministry.
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In the 16 states and UTs, 5 don't have any shortfall on account of GST compensation. The Ministry said in a statement that the central government borrowed and transferred Rs 6,000 crore as the first tranche to 16 states. The beneficiaries namely Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand and two union territories: UT of Delhi and UT of Jammu and Kashmir.
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This monetary arrangement will appear as capital receipts for state governments and won't reflect in the fiscal deficit of the Centre. The Centre is planning to make weekly releases of INR 6,000 crore to the states. Interest rate is 5.19% and the tenure is expected to be 3 to 5 years. The borrowing and its interest are to be settled from realisations on account of GST compensation cess.
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