Explained: Why is the Modi government fighting states over GST revenue?

And what are central and state governments doing to fix their budgets broken by Covid.

WrittenBy:NL Team

The coronavirus pandemic and the nationwide lockdown imposed in March to contain it have caused severe economic pain in India. GDP growth has plummeted, unemployment has soared, and businesses have been crippled.

One aspect of the economic crisis has stayed under the radar, however: the losses suffered by central and state governments from the drop in GST revenues. States, especially those governed by opposition parties, have been desperately asking for the money owed to them under the GST revenue sharing arrangement to deal with the pandemic and its economic impact, but the Narendra Modi government has been dragging its feet.

So, what are the states to do? Why has the Modi government tightened the purse strings? What could be the consequences of this crisis?

Meghnad S untangles the complex web of GST compensation to states, and explains how governments are scrambling to fix their budgets, and how all this is going to affect you.



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