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RBI study on state finances

Published on January 30, 2023

Current context: The Reserve Bank of India recently published its analysis on state finances. The report includes information on the financial standing of the states as well as a breakdown of the states that have received GST compensation.

RBI study on state finances

  • Tamil Nadu is one of the five states in the nation to receive GST compensation. Karnataka, Maharashtra, Gujarat, and Uttarakhand make up the remaining states.
  • The states and UTs most impacted by the termination of the GST compensation include Punjab, Delhi, Puducherry, Himachal Pradesh, Goa, and Uttarakhand.
  • The northeastern states benefited more from GST compensation out of all the states.
  • The states whose tax bases would be affected by the termination of GST compensation should strengthen compliance.
  • During the initial five years of the GST's implementation, the Union Government offered full reimbursement.
  • Based on sales growth, compensation was offered. With 2015–16 as the base year, the GST revenue growth rate grew to 14% annually in 2023.
  • As the global economy is expected to slow down in the near future, revenue growth will be impacted. In 2023, 1.2 trillion rupees were received through the GST compensation cess. In 2021–2022, it was 1.04 trillion rupees.


Q.1 Who recently released a research report on the analysis on state finances
a. SBI
b. RBI
c. Hinderburg
d. Ministry of finance

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