Jammu, Oct 29: Centre has released Rs 1064.44 Cr to Jammu and Kashmir under the back-to-back loan facility, in lieu of GST compensation.
This release is in addition to normal GST compensation being released every 2 months out of actual cess collection by the Centre.
This amount is part of the balance amount of Rs 44,000 Cr which the Government of India released to States and Union Territories (with Legislature) on Thursday to meet the resource gap due to the short release of compensation on account of inadequate amount in the Compensation Fund.
Earlier this month on October 7, Rs 967 Cr out of Rs 40,000 Cr were released to J&K under the same head to meet the GST shortfall.
On July 15 this year, J&K had received Rs 1813 Cr as GST compensation out of Rs 75,000 Cr released by the Centre to States and the Union Territories (UTs) with legislature.
As per official statement of the Union Ministry of Finance, with the release of Rs 44,000 Cr, the total amount released in the current financial year as back-to-back loan in lieu of GST compensation reached Rs 1,59,000 Cr. This amount also included release of Rs 1,15,000 Cr (Rs 75,000 Cr released on July 15, 2021 and Rs 40,000 Cr released on October 7, 2021).
“Subsequent to the 43rd GST Council Meeting held on May 28, 2021, it was decided that the central government would borrow Rs 1.59 lakh Cr and release it to States and UTs with Legislature on a back-to-back basis to meet the resource gap due to the short release of compensation on account of inadequate amount in the Compensation Fund,” the ministry statement added.
“This amount is as per the principles adopted for a similar facility in FY 2020-21, where an amount of Rs 1.10 lakh Cr was released to States under a similar arrangement. This amount of Rs 1.59 lakh Cr would be over and above the compensation in excess of Rs 1 lakh Cr (based on cess collection) that is estimated to be released to States/UTs with Legislature during this financial year,” the ministry said.
It stated that the sum total of Rs 2.59 lakh Cr was expected to exceed the amount of GST compensation accruing in FY 2021-22.
Earlier all eligible states and UTs (with Legislature) had agreed to the arrangements of funding of the compensation shortfall under the back-to-back loan facility for effective response and management of Covid-19 pandemic and a step-up in capital expenditure. For assisting the States/UTs in their endeavour, the Ministry of Finance had front-loaded the release of assistance under the back-to-back loan facility during FY 2021-22 of Rs 1,59,000 Cr.
“The release of Rs 44,000 Cr is funded from borrowings of the Government of India (GoI) in 5-year securities issued in the current financial year, at a Weighted Average Yield of 5.69 percent. No additional market borrowing by central government is envisaged on account of this release,” the ministry stated.
It expected that this release would help the States and UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects.