Ministry of Finance announced on Thursday that it has released Rs 44,000 crore to states and union territories under the back-to-back loan facility meant to compensate them for the GST shortfall. The Ministry said the total amount released now in lieu of the GST compensation in the current financial year totalled Rs 1.59 lakh crore. It informed that the amount released is in addition to normal GST compensation released every two months out of the actual cess collection.
The Ministry had earlier released Rs 75,000 crore in October and Rs 40,000 crore in July, this year. It stated the amount released would be funded from the Government of India's borrowing in five-year securities issued in the current financial year, at a weighted average yield of 5.69 per cent. "No additional market borrowing by Central Government is envisaged on account of this release," the ministry said.
As per the ministry, the amount would help states and union territories in shaping their public infrastructure, taking up infrastructure projects and improving health infrastructure.
It was decided after the 43rd GST Council Meeting that the central government would borrow Rs 1.59 lakh crore and disburse it to states and union territories on a back-to-back basis. This was aimed at helping the states meet the resource gap arising because of the short release of compensation as the compensation fund did not have adequate amount to process the same.