New Delhi [India], Oct. 28 (ANI): The Finance Ministry on Thursday released Rs 44,000 crore to states and union territories with legislature as part of the back-to-back loan facility in lieu of GST compensation.
According to an official publication, after taking into account the earlier version of Rs 1.15,000 crore (Rs 75,000 crore published on July 15, 2021 and Rs 40,000 crore published on October 7, 2021), the total amount released in the financial framework current year as a back-to-back loan instead of the GST compensation is Rs 1,59,000 crore. This release is in addition to the normal compensation for the GST which is released every two months from the actual collection of the housing tax.
As a result of the 43rd GST council meeting held on May 28, 2021, it was decided that the central government would borrow Rs 1.59 lakh crore and return it to the states and union territories with the legislature on a basis consecutive to respond to the resource. discrepancy due to the brief release of compensation due to insufficient compensation fund.
This amount is in line with the principles adopted for a similar facility during the 2020-2021 fiscal year, where an amount of Rs 1.10 lakh crore was paid to States under a similar agreement. This amount of Rs 1.59 lakh crore would be added to the compensation greater than Rs 1 lakh crore (based on the collection of cess) which should be paid to States, Union territories with a legislature during of this exercise. The total sum of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation accumulated during the 2021-2022 fiscal year.
All eligible states and UTs (along with the Legislative Assembly) have agreed to the terms of financing the shortfall compensation under the Back-to-Back Loan Facility. For an effective response and management of the COVID-19 pandemic and an increase in capital expenditure, all States and Union territories have a very important role to play. To assist the States / UT in their efforts, the Ministry of Finance has anticipated the release of assistance under the back-to-back loan facility during fiscal year 2021-22 of Rs 1,59,000 crore.
The current release of Rs 44,000 crore is funded by government borrowing of five-year securities issued during the current fiscal year at a weighted average yield of 5.69%. No further borrowing in the market by the central government is envisaged as a result of this publication.
It is expected that this press release will help States, Union territories to plan their public spending, among other things, for the improvement of health infrastructure and the resumption of infrastructure projects. (ANI)