The Modi government has released Rs 6,195.08 crore to 14 states on account of the eighth equated monthly instalment of Post Devolution Revenue Deficit Grant after the recommendation of the 15th Finance Commission interim recommendations, the Ministry of Finance said in a statement. The grant has been released to 14 states, including Andhra Pradesh, Assam, Himachal Pradesh (HP), Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal.
Based on the 15th Finance Commission interim recommendations, the Govt has released Rs 6,195.08 crore to 14 states on account of the eighth equated monthly installment of Post Devolution Revenue Deficit Grant. Details of the release: pic.twitter.com/VHUPZj06sT— NSitharamanOffice (@nsitharamanoffc) November 10, 2020
The highest amount was released to Kerala at Rs 1,277 crore, followed by Rs 952 crore to Himachal Pradesh and Rs 638 crore to Punjab. The 15th Finance Commission has provided a mechanism for the Centre to compensate the states for revenue losses incurred on post-devolution revenue deficit grants, following which these grants were released.
In a bid to bridge the goods and services tax (GST) revenue shortfall, the central government last month also borrowed and transferred Rs 6,000 crore as the first tranche to 16 states and union territories under a special borrowing window. As per the finance ministry, the borrowing is fixed at an interest rate of 5.19 per cent. The tenor of borrowing is expected to be broadly in the range of 3 to 5 years.
The government intends to make weekly releases of Rs 6,000 crore to the states, the ministry had earlier said. The coronavirus pandemic has led to an acute shortage of funds for the Centre as well as states. The issue of GST compensation reached a boiling point last month when the Centre decided to compensate as many as 21 states and two union territories, which opted for this special window involving back-to-back borrowing coordinated by the ministry.
As the coronavirus-related restrictions are being lifted, GST collection has also improved. In October, the GST collection crossed the Rs 1 lakh mark. The official data available till September suggests the Centre's gross tax revenue deficit for the current fiscal year stood at Rs 1.98 lakh crore.