No additional borrowing by Centre to meet GST compensation in FY22

By:
Categories: GST Recent News

The Centre will stick to its borrowing programme for FY22 and will not tap the market for more funds to meet the GST compensation shortfall for states.

Government officials said the current revenue position, where both direct and indirect tax kitty of the government had seen a sharp rise, will prevent it from additional borrowing even if it meets full GST compensation shortfall for states during FY22.

The centre has pegged its gross borrowing target for FY22 at Rs 12.5 lakh crore in the Union Budget 2021-22, presented by Finance Minister Nirmala Sitharaman earlier in February. Out of this, the effective borrowing in H1 of FY 2021-22 was Rs 7.02 lakh crore.

The government now plans to borrow the balance Rs 5.03 lakh crore in the second half year (H2) of FY 2021-22 without looking for additional borrowing to meet GST obligation.

With regard to GST compensation shortfall, the government estimated that it would be Rs 1.59 lakh crore after paying states from the collections made through HST compensation cess in FY22. Out of this, an amount of Rs 1,15,000 crore has already been paid to states in two tranches from regular borrowings of the Centre. Now, it proposes to meet the balance Rs 44,000 crore through its already planned fund mobilisation exercise without disturbing the borrowing calendar.

Source from: https://www.business-standard.com/article/economy-policy/no-additional-borrowing-by-centre-to-meet-gst-compensation-in-fy22-121101700241_1.html

CLOSE
CLOSE