Rajasthan takes Rs 1.1 lakh crore option to meet GST compensation shortfall

Rajasthan takes Rs 1.1 lakh crore option to meet GST compensation shortfall

The central government will borrow ₹1.1 lakh crore under the special window to meet the shortfall of Goods and Services Tax (GST) compensation, the finance ministry informed on Thursday. “Under the Special Window to States for meeting the GST compensation cess shortfall, the estimated shortfall of ₹1.1 lakh crore (assuming all states join) will be borrowed by Government of India in appropriate tranches,” the finance ministry said.

The amount borrowed will be passed on to the states as “back-to-back loan in lieu of GST compensation cess” releases, said the finance ministry. This borrowing will not have any impact on the fiscal deficit of the government. The amount will be reflected as the capital receipts of the state governments and as part of financing of its respective fiscal deficits, said the finance ministry. The Centre borrowing on behalf of states is likely to ensure that a single rate of borrowing is charged and this would also be easy to administer.null

The general government (states + centre) borrowings will not increase because of this, as the states that get the benefit from the special window are likely to borrow a considerably lesser amount from the additional borrowing facility of 2 percent of gross state domestic product (from 3 percent to 5 percent) under the Aatma Nirbhar Package, the statement said.

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