The government had released Rs 75,000 crore in July and Rs 40,000 crore earlier this month, as back-to-back loan in-lieu of GST compensation shortfall, amid the Covid 19 pandemic that had severely affected revenue generation and in turn capital expenditure for states.
“For assisting the States/UTs in their endeavour, Ministry of Finance has frontloaded the release of assistance under the back-to-back loan facility during FY 2021-22 of Rs 1,59,000 crore,” the ministry said in a statement.
“It is expected that this release will help the states and union territories in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects,” it added
This amount of Rs 1.59 lakh crore would be over and above the compensation in excess of Rs 1 lakh crore (based on cess collection) that is estimated to be released to states during this financial year. The sum total of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY22, the ministry added.
The release of Rs 44,000 crore being made now is funded from borrowings of GoI in 5-year securitiesissued in the current financial year, at a weighted average yield of 5.69%. No additional market borrowing by central government is envisaged on account of this release, the ministry added.
The total amount released by the government to states now stands at Rs 2.69 lakh crore for FY21 and FY 22, to meet the resource gap due to the short release of compensation on account of inadequate amount in the compensation fund.
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