Centre To Borrow Rs 1.1 lakh crore To Meet Shortfall Of GST Compensation: Finance Ministry

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, the estimated shortfall of ₹1.1 lakh cr (assuming all States join) will be borrowed by Government of India in appropriate tranches. The amount so borrowed will be passed on to the States as a back-to-back loan in lieu of GST Compensation Cess releases, the finance ministry stated.

This 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 financing of its respective fiscal deficits. This will avoid differential rates of interest that individual States may be charged for their respective SDLs and will be an administratively easier arrangement. The govt also 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% of GSDP (from 3% to 5%) under the Aatma Nirbhar Package, the ministry stated.

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