INDIA RATINGS MARKET WIRE: Budget Moves Positive for Few States
Author(s): India RatingsChennai, February 28, 2013: Eastern and backward states benefit substantially through increased allocations from backward regions fund – INR115bn and additional sum of INR10bn for Left Wing Extremists affected...
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Feb 28, 2013 12:30
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Chennai, February 28, 2013: Eastern and backward states benefit substantially through increased allocations from backward regions fund – INR115bn and additional sum of INR10bn for Left Wing Extremists affected districts – and green revolution – INR10bn.
India Ratings feels that the redefinition of backwardness through social indicators is a right step towards betterment of the states. The agency also notes that the state component under backward regions fund for Bihar, West Bengal, Odisha(KBK districts) and Uttar Pradesh (Bundelkhand region) could act as a credit positive.
Budget proposed 19% growth in states share in central taxes up from 14.2% FY12 (RE). Since states receive large share of their revenues from central government, this is a credit positive for states.
Although the centre has approved the state discoms restructuring scheme the absence of state’s interest in taking up the scheme continues to mar the sector. The finance minister has encouraged the states to embrace the scheme quickly to rein in the increasing debt service cost.
India Ratings feels the implementation of the Goods and Services Tax (GST) would be after the general elections however the draft GST from the state finance minister committee would be a giant leap in the process. At the same the government’s allocation of INR90bn as first instalment of CST compensation in budget has given the necessary push to implement GST for states.
(Source: Manager – Corporate Communications and Investors Relations, India Ratings & Research A Fitch Group Company)
