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Thursday, December 03, 2020

2nd tranche: Centre to transfer Rs 6,000 crore to 16 states and 3 UTs

This round of borrowing was done at an interest of 4.42 per cent, which is lower than the cost of borrowings for the states and UTs, thus benefiting them, the Finance Ministry said.

By: ENS Economic Bureau | New Delhi | November 3, 2020 3:01:46 am
The Finance Ministry had last month said the Centre would borrow from the market and then act as an intermediary to arrange back-to-back loans to pay the GST compensation shortfall of Rs 1.1 lakh crore to state governments.

The Finance Ministry on Monday said it will transfer the second tranche of borrowing worth Rs 6,000 crore for compensation shortfall to 16 states and 3 union territories including Andhra Pradesh, Maharashtra, Bihar, Karnataka, Puducherry and Delhi.

The Centre had on October 23 transferred Rs 6,000 crore to 16 states and 2 UTs of Delhi and Jammu and Kashmir, taking the total borrowed amount under the special window to Rs 12,000 crore.

Puducherry has become the latest to opt for borrowing under the special window and has been included in the second tranche. With this, 21 states and 3 Union Territories have opted for the special window till date and the loans raised by the Centre would be released on a back-to-back basis to states/UTs.

This second round of borrowing was done at an interest of 4.42 per cent, which is lower than the cost of borrowings for the states and UTs, thus benefiting them, the Finance Ministry said. The first tranche last month was borrowed at 5.19 per cent.

The Finance Ministry had last month said the Centre would borrow from the market and then act as an intermediary to arrange back-to-back loans to pay the GST compensation shortfall of Rs 1.1 lakh crore to state governments.

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