An announcement was made by the Finance Ministry on Saturday that ₹1-lakh crore of GST compensation shortfall has been released to 28 States and three Union Territories, covering 91% of the estimated shortfall of ₹1.10-lakh crore throughout the current fiscal on the account of GST implementation.

The Finance Ministry released the 17th weekly installment of ₹5,000 crores to States On Friday.  According to it, ₹4,730.41 crores have been released to 23 States and ₹269.59 crores to three Union Territories having Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry). Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim are the states which do not have a gap in revenue on the account of GST implementation. Till now, 91% of the total predicted GST compensation shortfall has been released to States and UTs. ₹91,460.34 crores have been released to the States and ₹8,539.66 crores to the aforementioned 3 UTs. A special borrowing window was set up by the center in October 2020 to meet the expected shortfall of ₹1.10-lakh crore in revenue arising on account of the implementation of GST, and the borrowings are being done through it by the Government of India on behalf of the States and UTs. 17 rounds of borrowings have been achieved so far beginning from October 23. The proportionate unfinished GST shortfall concerning borrowing under the five-year tenure has been achieved for 16 States and two UTs. These states and UTs were onboard for GST compensation release from the first installment.

The amount released this week was the 17th installment of these funds provided to the States. The amount has been borrowed this week at an interest rate of 5.59%. Up till now, an amount of ₹1-lakh crore has been borrowed by the Central Government by the special borrowing window at an average interest rate of 4.83%. Apart from granting funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50% of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall, helping them in mobilizing additional financial resources. All the States have presented their inclination for Option-I. The permission for borrowing the entire additional amount of ₹1,06,830 crore (0.50% of GSDP) has been granted to 28 States under this provision.