The Centre released Rs. 40,000 crore to States and Union Territories on Thursday to help meet the shortfall in GST compensation cess collections, through back-to-back borrowings from the market.
The Finance Ministry said this was part of the Rs. 1.59 lakh crore shortfall estimated in the Compensation Fund for States, to be raised via market borrowings, but indicated that total GST compensation to be paid in 2021-22 may exceed States’ actual dues for the year.
An amount of Rs. 75,000 crore had already been transferred in July, leaving another Rs. 44,000 crore to be borrowed and disbursed over the rest of 2021-22.
The balance amount would be released in due course, the Ministry said.
‘Over and above’
“This release is in addition to normal GST compensation being released every two months out of actual cess collection,” the Ministry said, adding that more than Rs. 1 lakh crore was also estimated to be released to States during the financial year, based on actual GST cess collections.
“The sum total of Rs. 2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 2021-22,” it added, signalling that some of the pending dues from 2020-21 would be offset to that extent.
“It is expected that this release will help the States/UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects,” the Ministry said.