BENGALURU: Two weeks after Union Finance Minister Nirmala Sitharaman, said that the same formula as last year will be adopted this year as well to pay GST compensation to the state, Karnataka has received official communication that Rs 18,109 crore will be passed on to the state from the Union Government’s borrowings.
It was estimated that the Centre will have to borrow Rs 1.58 lakh crore this fiscal year and pass it on to the states to offset losses arising out of GST implementation and the revenue slump due to the pandemic. In the last GST council meeting, Karnataka’s representative and Home Minister Basavaraj Bommai had urged the Centre to borrow the shortfall amount and pass it on to the states.
For the fiscal year 2020-2021, Karnataka had received Rs 12,407 crore as GST compensation in loans borrowed by the Centre through a special window. Despite this, the shortfall in revenue under the GST regime was an additional Rs 12,000 crore for Karnataka.
This time around too, there are worries that the Rs 18,109 crore, which will be given in several installments spread over the year, may be woefully short. The ‘GST loan’, availed by the Centre to make up for states’ revenue loss, was in addition to increased borrowing limit that was given to the states to mop up more resources during the pandemic.