UPSC CSE Mains Syllabus: GS-3- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

GST – Compensation issues – way forward

Compensation issue:

Centre’s reasoning:

Options for the states:

States have now been given two options, both requiring them to borrow from the market.

How has the state reacted:

Several States have rejected both options and some, including Tamil Nadu, have urged the Centre to rethink in view of their essential and urgent spending needs to curb the pandemic and spur growth.

What is needed: 

Such compensation is essential, not only to prevent the federal fabric from fraying but also to enable the states to pull their weight in the fiscal stimulus the economy needs in the face of an unprecedented blow. 

Source :”The Hindu”.

Possible UPSC Mains Question:

Goods and Services Tax (GST) which had begun to almost serve as an exemplar of co-operative federalism has now been disrupted due to the compensation issue between the centre and the states. Discuss.