Centre to borrow Rs 1.1 lac cr for GST compensation cess shortfall

New Delhi, Oct 15 (IANS): The Union government will borrow around Rs 1.1 lac crore in tranches under a special window for lending to states in place of the GST compensation cess.

A Finance Ministry statement on Thursday said that the move will not have any impact on the fiscal deficit of the government of India. The amounts will be reflected as the capital receipts of the state governments and as part of the financing of respective fiscal deficits.

Under Option-I for the borrowing in place of the GST compensation cess, states were to be provided a Special Window of borrowing of Rs 1.1 lac crore, and over and above that, an authorisation for additional Open Market Borrowings (OMB) of 0.5 per cent of their GSDP.

The authorisation for increased OMBs of 0.5 per cent of GSDP has been issued by the Ministry of Finance on October 13 and are in relaxation of the reform conditions that were stipulated for eligibility.

Additionally, under option-I, states are also eligible to carry forward their unutilised borrowing space to the next financial year, it said.

"Under the Special Window, the estimated shortfall of Rs 1.1 lac crore (assuming all states join) will be borrowed by Government of India in appropriate tranches," said the statement.

The amount so borrowed will be passed on to the states as a back-to-back loan in lieu of GST compensation cess releases.

This will avoid differential rates of interest that individual states may be charged for their respective State Development Loans (SDLs) and will be an administratively easier arrangement.

It may also be clarified that the General government (States + Centre) borrowings will not increase by this step. 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 per cent of GSDP (from 3-5 per cent) under the 'Aatmanirbhar Bharat' package.



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Comment on this article

  • Francis, Shirva/UK

    Fri, Oct 16 2020

    This is a disaster for Indian economy, borrowing and paying interest on it.
    Looks like government is bankrupt, and they don’t want to acknowledge it.
    If people don’t act on time, it will cost heavy for them.

    DisAgree Agree [3] Reply Report Abuse

  • D'Souza, Mangalore

    Fri, Oct 16 2020

    This govt is nothing but a sham.

    Honestly guys! Feeling sorry for Nirmala ji. Now she muyst be feeling like a thing that the cat has got between its teeth.

    DisAgree Agree [6] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Thu, Oct 15 2020

    I guess the GST Money was used to pay for 2 Boeing 777 Aircraft's for Useless International Tours ...

    DisAgree Agree [18] Reply Report Abuse

  • D'Souza, Mangalore

    Fri, Oct 16 2020

    These bunch of nuts do not know how to run a government.

    DisAgree Agree [7] Reply Report Abuse


Title : Centre to borrow Rs 1.1 lac cr for GST compensation cess shortfall


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