Centre releases Rs 75,000 crore to states as GST compensation; expert weighs in

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The government on Thursday, said it has released Rs 75,000 crore to the states and Union Territories to compensate them for the shortfall in GST revenue. The GST Council in its meeting on May 28 had decided that the central government would borrow Rs 1.59 lakh crore and release it to the states and UTs on a back-to-back basis to meet the resource gap due to the short release of compensation on account of inadequate amount in the compensation fund.

The government on Thursday, said it has released Rs 75,000 crore to the states and Union Territories to compensate them for the shortfall in GST revenue. The GST Council in its meeting on May 28 had decided that the central government would borrow Rs 1.59 lakh crore and release it to the states and UTs on a back-to-back basis to meet the resource gap due to the short release of compensation on account of inadequate amount in the compensation fund.
"Ministry of Finance has released Rs 75,000 crore today to the States and UTs with Legislature under the back-to-back loan facility in lieu of GST Compensation. This release is in addition to normal GST compensation being released every two months out of the actual cess collection," the ministry said in an official statement.
“It is definitely good news, I think. This GST related browning was like a hanging sword for the market because news of this came more than a month back. For the time being, it is definitely a relief. But the government has said that they won’t borrow extra in the first half, it raises the question that here is potential for extra browning in the second half,” said A Prasanna, Chief Economist of ICICI Securities PD, in an interview with CNBC-TV18.
On fiscal math, he said, “As far as the fiscal math is concerned, tax collections are good, though on the direct taxes side, I am not sure whether this is sustainable, we will have to wait and see. Maybe corporate taxes side and on the income taxes side, I have my doubts. On the interim taxes side again, yes, things are looking positive.”
“We should remember that even as real growth estimates have been scaled down, nominal growth is going to be much higher. Our estimate is nominal growth will be 18 percent,” he said.
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CompanyPriceChng%Chng
Dr Reddys Labs4,843.35 -567.90 -10.49
Cipla913.10 -37.45 -3.94
Axis Bank731.70 -24.60 -3.25
Adani Ports663.20 -19.60 -2.87
Divis Labs4,791.40 -129.75 -2.64
CompanyPriceChng%Chng
Dr Reddys Labs4,844.35 -564.80 -10.44
Axis Bank731.75 -24.40 -3.23
Kotak Mahindra1,697.95 -42.45 -2.44
Sun Pharma688.00 -15.55 -2.21
HDFC2,434.75 -29.40 -1.19

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