CENTER TO BORROW FROM RBI FOR GST SHORTFALL

CENTER TO BORROW FROM RBI FOR GST SHORTFALL

                                                                               16TH OCTOBER,2020

As stated by the Ministry of Finance the central government will borrow Rs1.1 lakh Crore under the special window to meet the shortfall of GST compensation to the states and union territories , amid Covid -19 Pandemic.The total shortfall in collection of GST estimated at Rs 2.35 lakh crore. Out of the total shortfall, Rs1.1 lakh crore is on account of GST shortfall.

The ministry further stated that the amount borrowed will be passed on to the states as "back-to-back loan in lieu of GST compensation cess" releases. The ministry further stated that such borrowing will not impact on the fiscal deficit of the government. The borrowed amount will be reflected as the capital receipts of the state governments . The Centre borrowing on behalf of states also ensures that a uniform rate of borrowing is charged as it will be easy to administer.