Amid Centre-states GST row, a white-knuckle moment for bond markets

Centre-state GST equation to be keenly watched

The bond market is keenly interested in how the Centre manages to settle the shortfall in the goods and services tax (GST) compensation and how many bonds will finally hit the market.  

Preliminary soundbites by finance ministry officials seem to suggest that bond issuances won’t be more than Rs 97,000 crore, which the government can work out through a special bond. These bonds will be issued by states, but will be effectively guaranteed by the Centre.  

Through these guarantees, the government will see if the coupon of these bonds can be kept as close to government securities as possible, Expenditure