The Modi government does not have the money to pay GST compensation to the states, it will borrow 22 22 billion

New Delhi, 26 May 2021 Wednesday

The Modi government may have to borrow for the second year in a row to pay GST compensation to the states. Sources said the government may have to borrow an additional Rs 1.58 lakh crore or about 21 21.7 billion this fiscal. The GST Council will meet on Friday under the chairmanship of Finance Minister Nirmala Sitharaman to discuss the issue. The GST Council is meeting after a period of 6 months.

The states have to pay Rs 2.7 lakh crore to the Center as GST compensation, but according to sources, the Modi government is in a position to pay only Rs 1.1 lakh crore. The GST Act provides that the Center will reimburse the loss of revenue to the States once GST is implemented. But the Corona virus epidemic has had a detrimental effect on central government revenue. This is the reason why the Modi government is considering taking additional loans.

Last year, it borrowed Rs 1.1 lakh crore

Last year too, the central government borrowed Rs 1.1 lakh crore for the states and gave it to the states in the form of loans. Sources said that the Reserve Bank of India will borrow more this year, the decision will be taken only after consultation on its amount and timing. Initially, the repayment period was 2022, but last year the central government extended it further.