GST eroding financial freedoms of States: K.N. Harilal
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Mains·
Why in news
K.N. Harilal, Chairman of the 7th State Finance Commission, argued that the GST regime and the FRBM Act have eroded the financial autonomy of State governments.
Background
K.N. Harilal, Chairman of the 7th State Finance Commission, highlighted that the Union government unilaterally determines indirect taxes under the GST regime. He noted that central revenue from GST has not increased despite its implementation, signaling a potential fiscal crisis.
Facts for Prelims
- Act / BillFiscal Responsibility and Budget Management (FRBM) Act: Legislation aimed at ensuring fiscal discipline.
- FactGST: A destination-based tax on the supply of goods and services.
For Mains
Q. Critically analyze how the current GST framework and fiscal legislations impact the fiscal federalism and financial autonomy of State governments in India.
Dimensions to cover in your answer
- Fiscal autonomy erosion: Centralized determination of indirect tax rates limiting State-level revenue generation
- Legislative constraints: FRBM Act's impact on State spending flexibility versus fiscal deficit targets
- Revenue stagnation: Lack of significant growth in central GST revenue despite structural reforms
Keywords: Fiscal Federalism · Financial Autonomy · Revenue Sharing · Fiscal Discipline · GST Regime
More Economy notes
- Karnataka Budget 2026-27: Share of Central funds decreasing by the year adds to fiscal pressure · 8 March 2026
- The South China Morning Post highlighted India's economic growth driven by high-tech centers and the services sector · 8 March 2026
- Share of women-led start-ups in ELEVATE sees steady rise · 8 March 2026
- Municipal bonds open new funding avenue for Bengaluru corporations, but will reliance on government fade? · 8 March 2026
- Geopolitical tensions in the Middle East have triggered a surge in benchmark crude oil prices, impacting the import costs for India and China · 8 March 2026
- Kerala govt. brings out draft notification revising minimum wages of employees in State’s private health sector · 7 March 2026
Something wrong, or something missing?
Spotted a mistake in a note, or want a topic, format or PDF that would help your preparation? Write to us. We read every mail and fix errors fast.
This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.