GST will not reduce deficits of State governments

Singapore: Goods and Services Tax (GST) regime in India is not likely to reduce the deficits of state governments significantly, amid large and growing expenditure mandates for the social sector as well as capital spending, says a report.

According to S&P Global Ratings the institutional framework for Indian states is evolving, but there are structural deficits due to persistent revenue expenditure mismatch.

S&P Global Ratings credit analyst YeeFarnPhua in the report titled "Public Finance System Overview: Indian States" noted that the passage of the GST bill in 2017 is a major overhaul of tax structure and will help to widen the tax base and improve revenues of state governments.