Kerala gets ₹956.04 cr. as GST compensation

Second instalment after Dec. 7 when it received ₹642.12 cr.

Kerala has received ₹956.04 crore from the Centre’s seventh weekly instalment of ₹6,000 crore to 23 States and three Union territories to meet the Goods and Services Tax (GST) compensation shortfall.

For the State, reeling under a severe financial crisis due to the pandemic-induced lockdown, this will be a big relief as it is the second instalment in the past eight days.

The ₹5,516.60 crore released to 23 States and ₹483.40 crore to the three Union Territories by the Centre on December 14 has been taken as loan through the Special Window of the Reserve Bank of India (RBI) at an interest rate of 5.13%.

The Union government had set up a special borrowing window in October 2020 to meet the estimated shortfall of ₹1.10 lakh crore in revenue arising on account of the implementation of the GST.

An amount of ₹42,000 crore has been borrowed by the Centre through the special borrowing window for the States and UTs at an average interest rate of 4.77%. This is in addition to additional borrowing permission of ₹1,06,830 crore granted to the States.

As per Option 1

For Kerala, this is the third instalment of the dues after joining other States and the Union Territories to accept Option I put forward by the Union government for meeting the GST compensation cess shortfall. On December 7, the State had received ₹642.12 crore as loan by the Union government through the Special Window of the RBI at an interest of 4.20%.

The State missed out the first four instalments released on October 23, November 2, November 9, November, 23, and December 1 following the delay in joining the twin options mooted by the Centre for settling the dues. A sum of ₹328.2 crore was earlier received in the State as GST compensation dues.

The Centre has already granted additional borrowing permission of ₹4,522 crore to Kerala (0.5% of the State’s GSDP), according to the Ministry.

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