Centre to borrow for states
- October 16, 2020
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Subject : Economy
Context : Centre to borrow ₹1.1 lakh crore on behalf of States to meet GST shortfall.
Concept :
- Government of India will now undertake the required borrowings in tranches and pass it on to States as a ‘back-to-back loan’ that will reflect on their own books.
- This will not have any impact on the fiscal deficit of the Government of India (GOI).
- The amounts will be reflected as the capital receipts of the State Governments and as part of financing of its respective fiscal deficits.
- This will avoid the prospect of individual States having to pay differential interest rates if they borrowed this corpus as a State development loan.