your password has been reset successfully, Please login again.

Finance Ministry Releases a Special Window for States to Meet GST Compensation Shortfall

Under Option-I States were to be provided a special window of borrowing of INR 1.1 lakh crore, and over
BY BEx Bureau
BusinessEx
Oct 15, 2020

The Ministry of Finance has released a special window for meeting the GST compensation.

Under Option-I States were to be provided a special window of borrowing of INR 1.1 lakh crore, and over and above that, an authorisation for additional open market borrowings of 0.5 per cent of their GSDP. The authorisation for increased OMBs of 0.5 per cent of GSDP has been issued by the ministry of finance and are in relaxation of the reform conditions that were stipulated for eligibility. Additionally, under Option-I, the states are also eligible to carry forward their unutilised borrowing space to the next financial year.

Under the special window, the estimated shortfall of INR 1.1 lakh crore (assuming all States join) will be borrowed by the Indian government 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.

This will not have any impact on the fiscal deficit of the government. 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.

It may also be 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 per cent of GSDP (from 3 per cent to 5 per cent) under the Aatma Nirbhar Package.

Please add your Comment
SIMILAR News
October 20, 2020
During April to August, 2020, the total FDI inflow of $35.73 billion is received; it is the highest ...More
By Jaspreet Kaur
October 12, 2020
Nirmala Sitharaman announced measures of INR 73,000 crore to stimulate consumer spending in the econ ...More
By Jaspreet Kaur
October 03, 2020
The ministry of finance has granted additional borrowing permission to Uttar Pradesh and Andhra Prad ...More
By Jaspreet Kaur
October 01, 2020
The events have been organised on the eve of Gandhi Jayanti to empower artisans ...More
By Jaspreet Kaur
September 30, 2020
The Ministry has dismissed media reports regarding TCS being applicable to the amount received befor ...More
By Jaspreet Kaur
September 09, 2020
The MSME contribution presently stands at 30 per cent in India’s economy, which is aimed to increase ...More
By Jaspreet Kaur
August 27, 2020
With this initiative, venture capital and private equity firms will be invited to infuse money into ...More
By Jaspreet Kaur
April 13, 2020
The Indian government is considering to resume some operations under preventive measures ...More
By Jaspreet Kaur
March 19, 2020
The government has decided to recruit a consulting agency to calibrate the development of the Startu ...More
By Jaspreet Kaur
February 03, 2020
In a recent union budget meeting, the government surged expenditure for Digital India Programme by 2 ...More
By Jaspreet Kaur
Our web site uses cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. Make an Informed decision OK x