Daily Financial News Analysis – 9th Oct’20 – Free PDF Download



  • The current state STATE government finances is bleak
  • Centre should disburse the GST compensation cess it receives to the states on a real-time basis.
  • The proceeds of cesses are not shared with the states.
  • Opposition-ruled states have demanded, in addition to the release of the entire amount of GST compensation cess collected, immediate release of their share of the Integrated Goods and Services Tax (IGST).
  • This, too, is perfectly justified.
  • These monies belong to the states, and when the Centre holds back payment to the states, it behaves like big companies that delay payment to their small suppliers.
  • About 10 states have rejected two options floated by the Centre of the states borrowing funds to compensate themselves for shortfall in GST collections, and want the Centre to borrow instead.
  • They could explore legal options, if the GST Council fails to resolve the tussle over GST compensation in its meeting scheduled for October 12.
  • When disputes arise between the Centre and the states in relation to GST collections and their disbursal, how are these to be resolved?
  • By consensus within the GST Council, ideally.
  • The ideal world is only an idyll.
  • That leaves voting by majority.
  • There should be a solution that lies between the elusive ideal and decision by force of numbers.
  • The need is to have a separate dispute resolution mechanism that should examine disputes of this nature and give its recommendation to the GST Council.
  • Let the final decision be taken by the GST Council itself, but let it consider the verdict of an expert body that examines and lists the pros and cons of the dispute before offering a reasoned solution.
  • The dispute resolution body should have as members fiscal and legal experts, and, perhaps, a representative of the Finance Commission if it is functional.
  • Its reasoned views could help strip the GST Council’s final call of arbitrariness.

Positive Agenda of QUAD

  • India shares a long and as yet undefined border with China, and Beijing is in illegal occupation of Aksai Chin.
  • Japan too has territorial disputes with China
  • Australia has been at the receiving end of China’s trade-related offensive.
  • For the Quad to deliver, it must have a positive agenda.
  • China’s aggressive posturing cannot be ignored.
  • Creating a strong Indo-Pacific region focused on a strong recovery from Covid underpinned by resilient supply chains should be at the top of the Quad’s agenda.

World Bank

  • Poverty and Shared Prosperity Report
  • By 2021, as many as 150 million people are likely to be in extreme poverty because of the coronavirus pandemic
  • Countries will have to prepare for a “different economy” post-Covid by allowing capital, labour, skills and innovation to move into new businesses and sectors.
  • The Covid-19 pandemic is estimated to push an additional 88 million to 115 million people into extreme poverty this year, with the total rising to as many as 150 million by 2021, depending on the severity of the economic contraction.
  • Had the pandemic not convulsed the globe, the poverty rate would have been expected to drop to 7.9% in 2020.
  • This would represent a regression to the rate of 9.2% in 2017
  • World Bank Group President: The pandemic and global recession may cause over 1.4% of the world’s population to fall into extreme poverty.
  • About 82% of the new poor total will be in middle-income countries.
  • In its report, the World Bank noted that the lack of recent data for India severely hinders the ability to monitor global poverty.




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