From CK Nayak
NEW DELHI, Sep 5: The drop in the GST collection of Meghalaya, a state dreaming of becoming a $10 billion economy in a decade despite being the third-poorest in the country, has raised fresh concerns about its fiscal health.
The state’s GST collection fell from Rs 239 crore in fiscal 2022-23 to Rs 234 crore during 2023-24, data provided by the Ministry of Finance showed. Assam’s collection during the same period increased from Rs 1,513 crore to Rs 1,895 crore – a hike of 25%.
Meghalaya’s GST dipped to 18% in August, which was the worst among the northeastern states. One of the factors is that the bulk purchasers of Shillong usually procure their items from Guwahati for several reasons, helping Assam increase its GST collection while Meghalaya loses out.
For instance, home builders in the state buy cement, rods, and other construction materials from Guwahati instead of Shillong. The reason is that the stockists or dealers in Guwahati provide home delivery of such commodities with free transport and no loading-unloading charges anywhere in Meghalaya. On the other hand, dealers and stockists in Meghalaya do not offer competitive prices on household materials despite the local advantage.
Most shop owners, too, get their bulk supply from Guwahati in tranches instead of stocking the same in Shillong. The system is so smooth that orders are placed on the phone and goods are supplied within 24 hours with payments made later on, a Shillong-based trader said.
A cross-section of the traders complained that the overall law and order situation in Meghalaya discourages them from storing goods in bulk. “If the sale is visibly more, certain organisations and individuals come to demand money,” a businessman said, declining to be quoted.
“Then there are frequent disruptions in commercial activities because of violence and unrest. Sometimes both the troublemakers and the law agencies are in collusion,” he said.
“There is also a lack of storing places in the city because of the terrain and controlled landholding system. The state’s weather with consistent rains also limits the storing capacity,” he added.
According to the interim budget for 2024-25, for every rupee in the government treasury, 63 paise will come from direct and indirect taxes. Among indirect taxes, GST will contribute the maximum, with 18 paise in every rupee of revenue.
The collection of GST is important since its revenue supports the central and state governments in funding essential services such as healthcare, education, and infrastructure and plays a crucial role in balancing fiscal deficits and ensuring economic stability. Shared by the Centre and the states, GST promotes a more equitable distribution of tax revenues among states and an improved overall economic integration within the country.
