This also places in sharp relief the Centre’s recent record of failing to transfer resources to the states, without which many of them will be unable to invest adequate funds. This failure to share revenues with the states now threatens overall development. Compensation is an integral component of the GST architecture to recompense states for the abolition of local taxes like sales tax. The government has so far disbursed ₹81,050 crore as compensation to states between April and September 2019. Similarly, it should be recognized that the unintended consequences of delaying the states’ share of GST compensation (and other transfers as well) could lead to a prolonged economic winter.

Source: Mint February 16, 2020 17:37 UTC