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Wednesday,04-August-2021

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GST compensation shortfall released to states touches Rs 1L Crore

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The Finance Ministry had released the 17th weekly instalment of Rs 5,000 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 4,730.41 crore has been released to 23 States and an amount of Rs 269.59 crore has been released to the three Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council.

The remaining five states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

Till now, 91 per cent of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of Rs 91,460.34 crore has been released to the States and an amount of Rs 8,539.66 crore has been released to the 3 UTs with Legislative Assembly.

The Government had set up a special borrowing window in October, 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST. The borrowings are being done through this window by the Government of India on behalf of the States and UTs.

Seventeen rounds of borrowings have been completed so far starting from 23rd October, 2020.

Under the special window, the Government of India has been borrowing in Government Stock with tenor of 3 years and 5 years. The borrowing made under each tenor is equally divided among all the States as per their GST compensation shortfall.

With the current release, the proportionate pending GST shortfall with respect to borrowing under 5 years tenure has been concluded for 16 States and 2 UTs. These States/ UTs were onboard for GST compensation release from the 1st Installment.

The amount released this week was the 17th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.5924 per cent. So far, an amount of Rs 1,00,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.8307 per cent.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government has also granted additional borrowing permission equivalent to 0.50 per cent of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources. All the States have given their preference for Option-I. Permission for borrowing the entire additional amount of Rs 1,06,830 crore (0.50 per cent of GSDP) has been granted to 28 States under this provision.

Business

Ola to launch electric scooters on Aug 15

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Ola scooter receives 100K bookings in a day.

Electric scooter maker Ola Electric Mobility Pvt Ltd will launch its models on August 15, said Bhavish Aggarwal, Chairman and Group CEO of the company.

“Thanks to all who have reserved our scooter! Planning a launch event for the Ola Scooter on 15th August. Will share full specs and details on product and availability dates. Looking forward to it,” Aggarwal tweeted on Tuesday

Cagey about the vehicle specifications and the price, the company had said that the pricing will be competitive.

The electric scooter will be rolled out of its factory in Krishnagiri district in Tamil Nadu and the total project outlay has been put at Rs 2,354 crore.

The plant set up over 500 acres of land is an integrated facility with manufacturing, battery as well as supplier parks, ensuring over 90 per cent of parts are localised and in close proximity.

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IL&FS realises Rs 33 cr by selling its vehicles, furniture

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Crisis-ridden IL&FS has recovered around Rs 33.28 crore by selling assets, including vehicles, furniture, and electrical installations among others.

IL&FS Group had identified a total of 38 luxury vehicles within the group, which had a purchase price value of Rs 25 lakh and above.

Out of the identified vehicles, 34 vehicles were sold and 2 others were surrendered to the leasing company.

The sale was conducted via public auction and an amount of Rs 7.33 crore was realized, said a company spokesperson.

However, two luxury vehicles remain within the group due to loan created on both the vehicles, and cannot be sold.

Further, 20 other vehicles including cars, two-wheeler, and project vehicles were also identified and sold for Rs 65.33 lakh with the amount duly realised.

Also, the movable assets of various group companies which included furniture and fixtures, electrical installations, lease improvements, old printers, UPS among others, located at offices, branches, and project sites that were closed or surrendered were auctioned, to recover an amount of around Rs 25.30 crore.

The group had an outstanding debt of Rs 99,355 crore as October 2018. The resolution process of the group and its group companies is underway.

Under the new board, a total of Rs 43,600 crore was the recovery addressed till May 31, 2021, which amounted to 44 per cent of the total debt. Around Rs 50,000 crore of estimated recovery is likely to be addressed by September 2021 and 95 per cent of the estimated recovery – Rs 58,000 crore – is expected to be addressed by March 2021, the group had said last month.

The overall resolution of the IL&FS group companies is likely to stretch beyond the current fiscal as the group has said that around 95 entities will be addressed after FY22 which would result in a debt recovery of around Rs 3,000 crore.

The Board of IL&FS expects to address overall debt recovery of Rs 61,000 crore.

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GST collections expected to improve, says SBI Ecowrap report

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GST collections expected to improve in coming months, said an SBI EcoWrap report.

“The overall GST collections in Apr-Jul 2021 is around 66 per cent higher than Apr-Jul 2020. Under this, the SGST is around 67 per cent higher than the same period last year. This is despite the devastating second wave India witnessed.

“Hence, in the coming months GST collections are expected to improve and states would have additional resources at their disposal to meet their finances,” it said.

Recently, official data showed that net tax collections for Q1FY22 stood at Rs 5.58 lakh crore.

The Q1 FY22 tax collections are 36 per cent of the budgeted tax collections.

“This figure used to be around 26-29 per cent in the previous years.

“Hence, the fiscal situation as of now looks promising even with the added expenditure that the Government has recently announced. It is only the disinvestment figures which could be undershot,” the report said.

The Centre has budgeted Rs 6.66 lakh crore as the states’ share in the tax collections.

“With improvement in the direct tax collections, it is expected that Centre will be able to provide this amount to the states, thereby helping them manage their finances better,” the report said.

In the last fiscal, the Centre had budgeted Rs 7.84 lakh crore, while it could only provide Rs 5.5 lakh crore.

However, the report noted that the Centre, however, has to release Provisional GST compensation to states or UTs to the tune of Rs 81,179 crore for Apr’20-Mar’21 and Rs 55,345 crore for Apr-May’21.

“This is subsequent to deliberations in the 43rd GST Council meeting, where it was decided that the Centre is borrowing Rs 1.59 lakh crore from the market through special window in current FY and passing it on to the states or UTs as a back to back loan in appropriate tranches as was done in last year,” it said.

As per this decision, the report, cited that Rs 75,000 crore has been released to states or UTs as on July 15, 2021.

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