Will GST Reforms Lead to Rs 7,000 Crore Revenue Loss for Telangana?
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Synopsis
The recent GST reforms are set to impact Telangana's finances significantly, with Chief Minister A. Revanth Reddy advocating for compensation from the Centre. As the state grapples with a projected Rs 7,000 crore revenue loss, the implications for essential services and infrastructure are concerning. This situation raises questions about fiscal responsibility and state support.
Key Takeaways
- Telangana faces a revenue loss of Rs 7,000 crore due to GST changes.
- Chief Minister is demanding compensation from the Central government.
- Viability Gap Funding is crucial for the state's financial recovery.
- Impact on essential services like health and education is significant.
- Infrastructure projects may suffer due to funding shortages.
Hyderabad, Sep 22 (NationPress) The state of Telangana is poised to face a financial setback of approximately Rs 7,000 crore due to the newly implemented Goods and Services Tax (GST) modifications, as stated by Chief Minister A. Revanth Reddy. He has urged the Central government to offer compensation for this revenue shortfall.
The Chief Minister criticized the Centre's unilateral decision-making, which he believes places an unfair burden on the states.
He emphasized the need for the Centre to provide Viability Gap Funding (VGF) for a period of five years, asserting that it is the Centre's responsibility to assist states that endure revenue losses from GST adjustments.
During a press briefing to announce bonuses for employees of the state-owned Singareni Collieries Company Limited, Revanth Reddy noted that the state government had formulated its financial plan based on anticipated revenues but is now facing challenges due to the revised GST slabs.
He called on Union Minister for Coal and Mines, G. Kishan Reddy, to advocate for Telangana's revenue loss with the Central administration.
The Chief Minister mentioned that Deputy Chief Minister Mallu Bhatti Vikramarka would draft a letter to the Centre, urging Kishan Reddy to engage with Prime Minister Narendra Modi to seek compensation for the state’s revenue loss.
Revanth Reddy pointed out that when GST was first introduced, the Centre had promised VGF for states experiencing a revenue decline of 14% or more. He insisted that in light of the second phase of GST amendments, the Centre should extend VGF for another five years.
In the 56th GST Council meeting, chaired by Union Finance Minister Nirmala Sitaraman in New Delhi on September 3, Deputy Chief Minister Vikramarka presented a report addressing the state's concerns.
He expressed that any decrease in state revenues due to the proposed GST rate adjustments would adversely affect vital services such as health and education, as well as welfare initiatives.
Furthermore, he highlighted that this would impact everyday citizens and the middle class, while the lack of funding for infrastructure projects would severely hinder state development.
Point of View
This issue highlights the ongoing tension between state and central governments regarding fiscal policies. The call for compensation reflects a broader concern about the sustainability of state revenues and the impact on public services. As states navigate these changes, a collaborative approach is essential for ensuring economic stability and growth.
NationPress
22/09/2025
Frequently Asked Questions
What is the estimated revenue loss for Telangana due to the new GST rates?
Telangana is estimated to face a revenue loss of nearly Rs 7,000 crore due to the revised GST rates.
What has Chief Minister A. Revanth Reddy requested from the Central government?
Chief Minister A. Revanth Reddy has urged the Central government to provide compensation for the revenue loss due to GST changes.
What is Viability Gap Funding (VGF)?
Viability Gap Funding (VGF) is a financial support mechanism provided by the government to support projects that are not financially viable without assistance.
How will the revenue loss impact essential services in Telangana?
The revenue loss is expected to directly affect essential services such as health and education, as well as welfare schemes for residents.
What steps is the Telangana government taking in response to the GST changes?
The Telangana government is preparing to request support from the Central government and is advocating for extended Viability Gap Funding.
