Finance Ministry Releases Rs 44,000 Crore To States

Finance Ministry has released Rs 44,000 crore to states as part of the back-to-back loan facility in lieu of GST compensation

Finance Ministry Releases Rs 44,000 Crore To States

Funds have been released to states as part of GST compensation

Finance Ministry has released Rs 44,000 crore to states as part of the back-to-back loan facility in lieu of GST compensation. With this, the total amount released to states is now Rs 1,59,000 crore, a statement issued by Finance Ministry said.

Thursday's amount is in addition to the normal GST compensation which is released every two months out of the actual cess collection.

During the meeting of the GST Council held on May 28, 2021, it was decided that the Centre will borrow Rs 1.59 lakh crore and release it to states on a back-to-back basis to meet the resource gap due to shortfall in compensation released to them.

All the eligible states had agreed to the arrangement during the meeting as it was seen as an effective response to counter the Coronavirus pandemic, whose second wave was raging across the country at that time.

The amount was seen as a step up in capital expenditure for all states and finance ministry had frontloaded the amount under the back-to-back loan facility to assist the states. 

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