The Centre’s intransigence towards public welfare schemes in the GST regime has dealt a severe blow to Telangana, the country’s youngest State where irrigation, drinking water and housing projects have been taken up on an unprecedented scale. It would be a travesty of justice if the State government is made to bear an additional financial burden, running into hundreds of crores, to meet the water needs of the region that had suffered decades of deliberate neglect in the combined Andhra Pradesh State. Instead of hand-holding the new State and helping in the implementation of its ambitious schemes meant for public welfare, the Central Government has unfortunately been insensitive to its needs. By failing to meet the legitimate demand for a rollback of GST on public works in irrigation, drinking water and housing sectors, the GST Council has meted out injustice to a state whose unique needs and requirements should have merited special attention. What Telangana has sought is not a tax exemption on luxury goods but a reasonable and humane approach towards ongoing public works that have a direct bearing on the welfare of the people. It would be misleading to claim that the Union Government has provided relief to Telangana by slashing the GST on the ongoing projects from 18% to 12%. The State Government had rightly demanded its reduction to 5% that was applicable in the pre-GST days. It must be noted that the budgetary provisions for flagship programmes like ‘Mission Kakatiya’, ‘Mission Bhagiratha’ and scores of infrastructure and housing schemes were made well before the GST rollout based on tax structure applicable under VAT. It would be impossible to make changes in the project expenditures if there is a sudden increase in the tax burden.
The IT and Industries Minister KT Rama Rao, who represented the State at the GST Council meeting in Delhi, made a strong and compelling pitch for waiver. The State would suffer an additional annual tax burden of Rs 19,000 if the GST rates are not reduced. It has taken up irrigation works worth over Rs 1 lakh crore while another Rs 18,000 crore worth works are underway in housing sector and Rs 30,000 crore worth works in the departments of Municipal Administration, Roads and Buildings, and Panchayat Raj. The State Government will be well within its rights to approach the court to seek justice if the Centre fails to respond positively to the demand for GST reduction. Unless the Centre extends the tax relief to the State, the budgetary allocations for the welfare programmes and development projects will need drastic restructuring. Hopefully, the next GST Council Meeting, to be held in Hyderabad next month, would take a favourable stand and ensure justice.