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GST compensation row: FM's 'act of God' can be a nightmare for RBI

The government has invoked "act of God" for not paying its due to the states directly

reserve bank of india, rbi
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Government has asked states to borrow more from the market, through an RBI arranged mechanism

Anup Roy Mumbai
The Centre’s move to find an alternative arrangement for paying states their due on Goods and Services Tax (GST) will complicate matters for the bond market and the Reserve Bank of India (RBI) that has struggled recently to keep yields under check.

The government has invoked “act of God” for not paying its due to the states directly. Instead, it asked states to borrow more from the market, through an RBI arranged mechanism. While the role of the RBI has not been spelt out yet, it is unlikely to be substantially different from what the RBI practices already, say experts.

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First Published: Aug 31 2020 | 6:09 AM IST

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