FM Nirmala Sitharaman conducts pre-budget consultations with State/ UT Finance Ministers

Finance Minister Nirmala Sitharaman held a virtual pre-Budget Consultation meeting on January 18, 2021 with the Finance Ministers of States and Union Territories in connection with the upcoming Union Budget 2021-22.

The meeting was attended by Chief Ministers, Deputy CMs, Finance Ministers and senior officials from the States and Union Territories.

Significance

The Finance Minister highlighted the importance of the meeting as a sign of co-operative federalism. The states/ UTs thanked the Finance Minister for the financial support during the pandemic by enhancing borrowing limits and providing back-to-back loans to states.

The participants also gave many suggestions to the Finance Minister for inclusion in the Budget Speech.

Union Finance Minister Smt. @nsitharaman holds Pre-Budget meeting for upcoming Budget 2021-22 with Finance Ministers of all States and Union Territories (with legislature) through video conferencing in New Delhi today. (1/2) pic.twitter.com/wD3xXQcxVx

— Ministry of Finance (@FinMinIndia) January 18, 2021

Finance Ministry releases 12th weekly installment to states

• The Finance Ministry also released the 12th weekly installment worth Rs 6000 crore to the States/ UTs on the same day to meet the GST compensation shortfall. 

• Out of this, Rs 5,516.60 crore was released to 23 States and Rs. 483.40 crore was released to 3 UTs with Legislative Assembly - J&K, Puducherry and Delhi.

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

• The government has till now released 65 percent of the total estimated GST compensation shortfall, out of which  Rs 65,582.96 crore was released to states and Rs 6,417.04  was released to three UTs. 

Background

The centre had set up a special borrowing facility in October 2020 to meet the estimated GST shortfall of Rs.1.10 Lakh crore in revenue. The government did the borrowings from this window on behalf of the states and UTs and till now, 12 rounds of borrowings have been completed.