Centre may need to borrow Rs 1.6 trn more to pay states for revenue loss

The government is expected to muster only Rs 1.1 trillion as it borrows more for a second year straight.

India may need to borrow more for a second straight year to compensate its states for their revenue loss due to a shortfall in a nationwide consumption tax collection, according to people with knowledge of the matter.

The additional borrowing requirement is estimated at 1.58 trillion rupees ($21.7 billion) in the fiscal year started April 1, said the people, who asked not to be identified citing rules. A panel on goods and services tax will meet on Friday to discuss compensation to states, among other issues.

While the amount to be paid to states works out to 2.7 trillion rupees,