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Government Releases 17th Instalment To States, Rs 1 Lakh Crore Released Since October 2020

The government has released Rs 1 lakh crore to states and union territories in four months since October 2020, to meet the good and services (GST) compensation shortfall, the Ministry of Finance said in a statement on Saturday, February 20. The Finance Ministry released the 17th weekly installment of Rs.5,000 crore to the states in order to meet the GST compensation shortfall. Out of this, an amount of Rs. 4,730.41 crore was released to 23 States and an amount of Rs. 269.59 crore was released to the three union territories, viz. Delhi, Jammu & Kashmir and Puducherry, who are members of the goods and services (GST) council, according to the Finance Ministry’s statement.

The remaining five states – Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim do not have a gap in revenue on account of the GST implementation. So far, 91 percent of the total estimated GST compensation shortfall has been released to states and union territories. Out of this, an amount of Rs. 91,460.34 crore has been released to the states and an amount of Rs. 8,539.66 crore has been released to the three union territories with Legislative Assembly.

The government had set up a special borrowing window in October 2020, in order to meet the estimated shortfall of Rs. 1.10 lakh crore in revenue arising on account of the implementation of GST.  Under the special window, the government has been borrowing in Government Stock with the tenor of three years and five years. The borrowing made under each tenor is equally divided among all the states as per their GST compensation shortfall.


According to the Finance Ministry, the amount released this week was the 17th installment of such funds provided to the states. This week, the amount was borrowed at an interest rate of 5.5924 per cent. So far, an amount of Rs. 1,00,000 crore has been borrowed by the government through the special borrowing window at an average interest rate of 4.8307 per cent. Starting from October 23, 2020, a total of 17 rounds of borrowings have been completed so far.

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