At least 26 states and union territories (UTs) have seen more than a fourth of their GST revenues getting wiped out due to coronavirus-induced lockdown during the first five months of financial year 2020-21 compared to the corresponding period in 2019-20.
According to the details shared by the Minister of State for Finance Anurag Singh Thakur in Lok Sabha, states such as Mizoram and Goa are staring at the widest shortfall of nearly 43 per cent in the comparable period. States such as Jharkhand and Uttarakhand too have seen analogous GST revenue losses-from Rs 10,091 crore to Rs 5,967 crore and from Rs 6,327 crore to Rs 3,760 crore, respectively. Further, around 11 states and UTs saw a revenue gap ranging between 30 per cent and 38 per cent during April-August 2020 compared to the same period last fiscal year. On an average, these 26 states and UTs have recorded almost 29 per cent decline in their GST revenues over the first five months of FY21. Sikkim and Tripura reported a single digit fall of 6.7 per cent and 2.1 per cent, respectively. Nagaland was the only outlier with nearly 12 per cent growth.
The GST Council in its 41st meeting on August 27, 2020, had given two borrowing options to its member states, enabling them to meet their compensation shortfall at the lowest possible rate of interest at the RBI's single window facilitated by the Finance Ministry as per their individual choice.
Section 18 of Constitution Act, 2016 provides for payment of GST compensation to the states, on the recommendation of the GST Council, for loss of revenue arising on account of implementation of GST for a period of five years.
Thirteen states have given their borrowing options proposed by the GST Council to meet their compensation shortfall so far. Six more states - Goa, Assam, Arunachal Pradesh, Nagaland, Mizoram and Himachal Pradesh - will be giving their option in a day or two.