The GST Council meeting on Friday will discuss the contentious issue of compensation shortfall for 2021-22 with the Centre and the states preparing for another showdown over how it should be repaid. Sources said the Centre may borrow again this fiscal to meet the shortfall and this would be in addition to over Rs 12 lakh crore budgeted this year to bridge the fiscal deficit.
The expected shortfall is likely to be about Rs 1.6 lakh crore. However, even this is likely to be subject to discussion on how much can be attributed to Covid and how much to economic slowdown.
Last year, the Centre had borrowed Rs 1.1 lakh crore. However, it might be hard to do that this year as the govt is expected to raise its own borrowings and the RBI is planning more bond auctions to provide funds to banks and MFIs.
Even as the GST receipts have come in at more than Rs one lakh crore each month for seven successive months till April, it is likely to slow down amid lockdowns implemented by most states to curb the spread of the second wave of the pandemic.