In the serene ambiance of New Delhi, Finance Minister Nirmala Sitharaman expounded on the profound impact of the Goods and Services Tax (GST) on the North Eastern states during her address at the distinguished ‘Conclave 2023.’ The states of the Northeast have experienced a substantial surge in their revenue collections since the inception of this tax reform in 2017, a testament to its efficacy.
Sitharaman elucidated that the region’s prosperity stems from the government’s unwavering commitment to bolstering infrastructure and enhancing connectivity. Moreover, these states have reaped the rewards of augmented tax transfers and the allocation of funds for vital asset creation.
It is noteworthy that the improvements in tax collection have not been confined solely to regions with bustling manufacturing hubs. Sitharaman underscored that even states with more modest manufacturing activities have witnessed impressive growth in GST revenue. She clarified that this phenomenon does not diminish the contributions of manufacturing states, as they, too, benefit from taxes levied on goods produced and consumed within their boundaries, as well as those imported from other states for local consumption.
The essence of the GST lies in its status as a destination-based tax on consumption. This pivotal shift from the pre-GST era has bestowed a considerable advantage upon states with limited manufacturing capacities. Such states now enjoy the proceeds of Integrated GST (IGST) on imports, further fortifying their fiscal position.
Sitharaman offered a resounding affirmation that the Northeastern states stand as the paramount beneficiaries of the GST regime. She pointed out that these states have exhibited a remarkable compound annual GST revenue growth rate of 27.5% since the GST’s inception, a stark contrast to the pre-GST annual growth rate of 14.8%. This bolstered revenue stream equips the states with the means to implement crucial programs for their development.
Furthermore, Sitharaman revealed that the quantum of tax devolution to this region has quadrupled between 2014 and 2023, now standing at a substantial ₹5.06 trillion. To catalyze capital asset creation, the Northeastern states have also been granted ₹15,440 crore in interest-free, 50-year loans since the fiscal year 2020-21.
In closing, these developments underscore the transformative impact of GST on the Northeastern states, both in terms of revenue growth and the facilitation of essential infrastructure projects. As the economic landscape continues to evolve, the Northeast remains a shining exemplar of the positive outcomes achievable through strategic tax reforms.