Letter to BS: Economic erosion is a vicious cycle, and wide-ranging

With central GST collections going down, states have begun to feel the pinch. States with less than 14 per cent per annum tax revenue growth are to be compensated by the centre. At least five states claim overdue transfers of up to Rs 40,000 crore. This needs timely attention. The decline in growth is at a seven-year low at 5 per cent. The erosion in the economy is wide ranging -- banks, businesses, exports and hence job creation. The unemployment rate is the highest in decades and investment — government and private — has dipped; the manufacturing index has gone negative. Against the estimate of revenue collection at Rs 24.5 trillion, the April-September inflow is at just Rs 9.3 trillion. By its very construct, GST disadvantages manufacture-oriented states and should these now be denied equalising central transfer, our manufacturing base itself gets destabilised. A vicious cycle then follows.

R Narayanan, Navi Mumbai
 

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