Since general government debt will rise regardless of who borrows for GST compensation, a plan to move to a sustained borrowing trajectory should be made.
In April and May, the central govt transferred cash based on tax collection estimates. But with actual collections falling well short, the amount will soon dip.
Expenditure Secretary T.V. Somanathan tells ministries to first check if states have capacity to utilise money, and are not parking it and earning interest.
More than half the delay compensation rejections in 2017-18 are due to “insufficient funds”. Centre says no paucity of funds, states just being careless.
Ruhi Tewari
So far what we have seen of the 2024 elections is enough to indicate that the continuous slide of democratic standards is headed toward breaching the minimum threshold of an electoral democracy.
While releasing 'India Employment Report 2024', V Anantha Nageswaran said govt can't solve 'all social, economic challenges'. Congress leader Kharge says CEA protecting 'dear leader'.
In an interview with Gulistan News this week, Union Home Minister Amit Shah said the government would leave law and order to J&K Police and slowly withdraw troops.
The ‘idea’ Kejriwal's politics grew around was a no-holds-barred fight against corruption. That is the reason Modi govt has now tarred him and his entire party with the same paint.
if states borrow, they have to pay the interest which centre will not compensate, hence the disadvantage to states. why not just increase limit of investment under small savings ( post office savings, PPF, kisan patra etc, but do not increase limit under Sec80C). Retired people who do not have pension and other weaker sections will be benefited . Also some part of this collection goes to centre, major part to the collecting state.
Not a convincing argument. If the states go to the market to borrow, interest rates, nevertheless, will go up. The spreads states pay over and above the sovereign federal debt benchmark will also go up; differently for different states. The yields on central government bonds too will also rise in sympathy. Moreover, not all states will be able to borrow. Some will, many may not. This opens up a political minefield. Given the political polarisation, the centre is more likely than not be supportive (by making phone calls to put pressure on the banks – who are the main investors) of the borrowing program of the states partisan to itself leaving the other states in the lurch. Under the public debt act, the centre is as much liable for the borrowings by the states. The centre being the senior partner, it should tale an accommodative stance and borrow in tandem with the states, not shove the onus on states under the pretext of (i) saving its ammunition for its own borrowing program and (ii) not disturbing the benchmark rates in the system by pushing up interest rates in the system. As it is, the interest rate transmission mechanism in India is faulty. The centre’s insistence on the ‘states going first’ will be disastrous.
How do you expect any wise decision when you have a finance minister this dumb….
if states borrow, they have to pay the interest which centre will not compensate, hence the disadvantage to states. why not just increase limit of investment under small savings ( post office savings, PPF, kisan patra etc, but do not increase limit under Sec80C). Retired people who do not have pension and other weaker sections will be benefited . Also some part of this collection goes to centre, major part to the collecting state.
Not a convincing argument. If the states go to the market to borrow, interest rates, nevertheless, will go up. The spreads states pay over and above the sovereign federal debt benchmark will also go up; differently for different states. The yields on central government bonds too will also rise in sympathy. Moreover, not all states will be able to borrow. Some will, many may not. This opens up a political minefield. Given the political polarisation, the centre is more likely than not be supportive (by making phone calls to put pressure on the banks – who are the main investors) of the borrowing program of the states partisan to itself leaving the other states in the lurch. Under the public debt act, the centre is as much liable for the borrowings by the states. The centre being the senior partner, it should tale an accommodative stance and borrow in tandem with the states, not shove the onus on states under the pretext of (i) saving its ammunition for its own borrowing program and (ii) not disturbing the benchmark rates in the system by pushing up interest rates in the system. As it is, the interest rate transmission mechanism in India is faulty. The centre’s insistence on the ‘states going first’ will be disastrous.