Jharkhand Finance Minister Warns of Rs 2000 Crore Annual Revenue Loss Due to Proposed GST Reforms

Jharkhand Finance Minister Radhakrishna Kishore expressed concerns over the proposed GST reforms, predicting a potential annual revenue loss of Rs 2,000 crore for the state. During the 56th GST Council meeting in New Delhi, Kishore urged the central government to compensate for this anticipated shortfall. He highlighted that sectors like automobile and cement would be significantly impacted by these changes.

Representative image

Jharkhand's status as a manufacturing state has been adversely affected by the Goods and Services Tax (GST) system, according to Kishore. He noted that the state's internal revenue collection has suffered due to GST. With a per capita income of Rs 1.05 lakh annually, Jharkhand does not qualify as a consumer state because of its residents' limited purchasing power.

Revenue Loss and Economic Impact

From 2017 to 2024-25, Jharkhand has experienced an estimated revenue loss of Rs 16,408 crore due to GST implementation. This figure is projected to rise to approximately Rs 61,670 crore by 2029. Kishore pointed out that around 75 to 80 percent of Jharkhand's coal and steel production is consumed outside the state, benefiting consumer states instead.

Kishore proposed several measures to mitigate these losses. He suggested rationalising rates with a robust revenue protection framework and implementing a supplementary duty on sin and luxury goods. Additionally, he called for a guaranteed compensation mechanism to safeguard Jharkhand's fiscal autonomy while supporting GST reforms.

Call for Compensation and Support

The finance minister emphasised that Jharkhand should receive a guaranteed minimum compensation of Rs 2,000 crore annually until its revenue stabilises. "Only such a balanced approach will protect the fiscal autonomy of states while advancing the objectives of GST reforms in the true spirit of cooperative federalism," Kishore stated.

He reiterated that without adequate compensation, Jharkhand's economic challenges would persist. The state's recommendation aims to ensure fair distribution of GST benefits across all states, particularly those with significant manufacturing outputs like Jharkhand.

Kishore's appeal underscores the need for equitable financial support from the central government to address the disparities caused by GST implementation. His proposals highlight the importance of maintaining fiscal balance while pursuing national tax reforms.

With inputs from PTI