New Delhi: GST compensation payment of nine select states, including Gujarat, Maharashtra and Kerala, is expected to double to Rs 60,000-70,000 crore in 2019-20, according to a report.
The timing of release of such grants by the Government of India (GoI) to these states would critically affect their cash flows, ICRA said in a report.
The states are Karnataka, Kerala, Gujarat, Maharashtra, Punjab, Haryana, Rajasthan, Tamil Nadu and West Bengal, the report said.
ICRA also expressed apprehension that "the central tax devolution (CTD) to these states in 2019-20 could be Rs 595-770 billion (Rs 59,500-77,000 crore) lower than what the GoI has budgeted, which has emerged as a key revenue risk for the states in this fiscal."
Accordingly, a reduction in capital expenditure below the budgeted level appears imminent in the current fiscal.
Subdued economic growth and reductions in GST rates have resulted in a muted 3.7 per cent rise in the headline GST collections in April-November 2019.
ICRA expects the actual SGST collections in the current fiscal to be considerably lower than the level of revenues protected under the GST (Compensation to States) Act, 2017, which is calculated based on a 14 per cent annual growth rate on the base year (FY2016) revenues subsumed into the GST.
