Centre may raise loan to pay GST dues to States 

#GS2 #Governance 

Rise in spending to tackle COVID-19 

  • The Union government is exploring raising a loan to pay the shortfall of the Goods and Services Tax (GST) compensation amount to the States as the latter have had to ramp up spending to combat the outbreak of COVID-19. 
  • The idea has been circulated and since the GST Act prohibits withdrawal of funds from the Consolidated Fund, raising loans is being seen as a way out. 
  • For December 2019 and January 2020, the Central government owes around ₹30,000-35,000 crore as compensation and around ₹30,000 crore for February and March.  
  • The government had last week released ₹14,103 crore to States as the second tranche of compensation for October and November 2019. It paid ₹19,950 crore in February for these two months. 
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