Bumper GST collections could lead to compensation windfall for states

Extending compensation is a topic that has remained a sticking point in India's federal structure, with not only opposition states but also BJP-governed states speaking about it

Last week, Finance Minister of Kerala K N Balagopal wrote to Union Finance Minister Nirmala Sitharaman regarding the finances of the state. Balagopal blamed the centre for putting it in a grave financial crisis by slashing its resources by Rs 23,000 crore in the current fiscal year.

He said that the centre had done so by reducing revenue deficit grants, ending goods and services tax (GST) compensation from July, and factoring in borrowings by state entities as public account liability while fixing borrowing limits of Kerala and other states.

Kerala was the latest among states that have formally or informally