The Center paid a second installment of Rs 6,000 crore to 16 states for GST compensation

The first installment of GST compensation of Rs 6,000 crore was paid on October 23

(PTI) New Delhi, Ta. Monday, November 2, 2020

The Center has started compensating the states for the reduction in GST revenue. The central government has paid Rs 6,000 crore as second installment of GST compensation to 16 states and three union territories. The 16 states also include Maharashtra, Gujarat, Bihar, Assam, Delhi and Jammu and Kashmir, the finance ministry said in a statement.

Earlier, on October 23, the first installment of GST compensation of Rs 6,000 crore was paid. The central government will borrow a total of Rs 1.1 lakh crore to compensate the states for the reduction in GST revenue.

The government had set up a special borrowing window to address the problem of reduction in GST collection during the financial year 2020-21. 21 states and two union territories agreed on this. Five of these states have not seen a decline in GST revenue.

A statement issued by the Finance Ministry said that the Center today in the form of second installment, Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand, Delhi and Jammu and Kashmir have been compensated for the reduction in GST revenue.

According to the Finance Ministry's plan, it will pay Rs 6,000 crore in compensation to the states every week. The government will borrow at 5.19 per cent. The repayment period will be 3 to 5 years. However, the effect of this amount will not be seen in the fiscal deficit.