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Infections-restrictions-vaccinations to vary state fiscal outcomes: ICRA
Infections-restrictions-vaccinations to vary state fiscal outcomes: ICRA

New Delhi, May 27 (TIWN) The first GST Council meeting, coming in the midst of second wave of the pandemic, may have to devote a lot of time to find ways to settle the states' GST compensation requirement for FY22, apart from looking at measures for Covid relief.

According a projection made by ICRA, the GST compensation requirement of states would work out to more than double of last year at Rs 2.65 lakh crore in the current year. This is based on estimates that FY22 state GST (SGST) collections of all states would be to the tune of Rs 6.1 lakh crore.     If this is the case, the Centre would be hard-pressed to compensate states even in the current year. The limited borrowing window and fear of fiscal stress would further create problems for the Centre to find a way to compensate states that also is accepted by most of them.  The ICRA report noted that the state governments' FY22 budgets had projected a welcome fiscal consolidation for the current year, after the pandemic-induced disruption in FY2021. However, most of these budgets were published before the second surge in Covid-19 infections, which has reignited uncertainty regarding growth and fiscal outlook.

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