To meet the GST compensation shortfall, the eighth installment of Rs.6,000 crore was released as loan by the Centre to states. Today, the finance ministry stated that so far Rs 48,000 crore worth of loan has been released through the special borrowing. To 23 states, Rs. 5,516.60 crore and to three union territories Delhi, Jammu & Kashmir & Puducherry, Rs.483.40 crore worth of loan has been released.

Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim are the remaining five states who do not have revenue gaps concerning GST implementation.The ministry stated that this week the interest rate on the loan is 4.1902% and the average interest rate was at 4.6986%. It also stated that an additional borrowing of Rs.1,06,830 crore has been permitted to states which is equivalent to 0.5% of gross domestic products of states.

The Rs 1.1 lakh crore option has been taken by all states. In this option the Centre will borrow the loan amount and on a back-to-back basis, transfer it to the states as loans.

To meet the GST compensation shortfall, the Centre had put two options of borrowing with different sets of conditions – Rs 97,000 crore and Rs 2.35 lakh crore. The Centre has increased the first option of borrowing to Rs 1.1 lakh crore and as no state was interested in the second option, it was taken off the table.

Initially, states like Jharkhand, West Bengal, Chhattisgarh, Punjab and Kerala had decided not to take any of the borrowing options but now by taking the first option, have come on board.


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