During an event on Saturday, Finance Minister Nirmala Sitharaman stated that the North Eastern states have experienced a significant increase in their GST revenue following the implementation of the Goods and Services Tax (GST) in 2017.
Sitharaman, speaking at ‘Conclave 2023,’ pointed out the favourable impact of the Goods and Services Tax (GST) on the North Eastern states. She highlighted that these states have seen substantial growth in their revenue collections since the introduction of GST in 2017. Sitharaman attributed this progress to the government’s dedication to developing infrastructure, enhancing connectivity, increasing tax transfers, and allocating funds for asset creation in the region.
Additionally, the Finance Minister stressed that not only has GST collections improved but also benefitted regions with limited manufacturing activity. She clarified that states with industrial solid areas have not experienced decreased GST collections because they benefit from taxes on locally manufactured and consumed goods and those imported from other states for local use.
The GST system, which is a consumption-based tax, indicates that importing states get benefits from tax on inter-state trade, a benefit absent in the pre-GST regime. This has proven advantageous for states with limited manufacturing as they receive revenues from Integrated GST (IGST) on imports.
Sitharaman observed that despite the Northeast’s lower manufacturing activity, GST collections and tax devolution from the central government have significantly increased, making the northeastern states the primary beneficiaries of GST.
Further, she added that an impressive compound annual growth rate of 27.5% in GST revenue since GST’s implementation, compared to the pre-GST annual growth rate of 14.8%. This increased revenue has allowed these states to implement various programs effectively.
Moreover, Sitharaman noted that tax devolution to the region has boosted by four times between 2014 and 2023, reaching ₹5.06 trillion. Additionally, for capital asset creation since the fiscal year 2020-21, the northeastern states have been approved with interest-free 50-year loans totalling ₹15,440 crores.
