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RS 40,000 CRORES RELEASED FOR STATES AND UTs BY GOI

RS 40,000 CRORES RELEASED FOR STATES AND UTs BY GOI

Context:

On October 7, 2021, the central government released a total of Rs 40,000 crore to states and union territories (UTs) with the legislature.

Key Highlights:

  • The amount is disbursed under a back-to-back loan facility for meeting the shortfall in GST compensation.
  • The amount is deducted in addition to the standard GST compensation issued every two months due to actual cess collection.
  • For the 2021-22 financial year, GST compensation is funded from borrowings of the Centre in five-year securities, totalling Rs 23,500 crores at a weighted average yield of 5.69%. It will also be funded in two-year securities, totalling Rs 16,500 crores at a weighted average yield of 4.16% per annum.
  • With this release, the total amount for the current financial year as a repayment loan is equivalent to $ 1,15,000.
  • Prior to this release, the Ministry had allocated R75,000 to the provinces in July 2021.

Important of the Release:

  • This release is expected to assist countries in planning their public spending, improving health infrastructure and introducing new infrastructure projects.

Background:

  • These funds are disbursed in accordance with the resolution adopted by the 43rd GST Council Meeting.

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