GST Regime Hurt Smaller States, Needs Reform: Himachal CM

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Himachal CM Sukhvinder Singh Sukhu Blames GST for Eroding Revenue Autonomy of Hill States, Accuses BJP of Ignoring Regional Concerns

By TRH Political Bureau

NEW DELHI, July 20, 2025 — Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu has sharply criticized the current Goods and Services Tax (GST) framework, claiming that it has severely impacted smaller and less populous states like Himachal Pradesh. In an interview with Jansatta, Sukhu argued that states with limited industrial bases have lost financial autonomy and are struggling to maintain fiscal stability.

“GST has caused major revenue loss for small states. We are not getting back even what we used to collect from local taxes before its implementation,” Sukhu told the Hindi daily.

Highlighting the constraints faced by hill states, the Chief Minister said that Himachal has not yet recovered its share of dues under GST compensation, despite repeated appeals. He accused the Centre of showing indifference to states that contribute less to national tax revenue but face high logistical and environmental costs.

Sukhu expressed concern over the erosion of state rights in fiscal matters. “States like ours have specific needs—topography, infrastructure, disaster vulnerability—but our voices are rarely heard in policymaking,” he said.

The Himachal CM also took potshots at the previous BJP government in the state, accusing it of leaving the state treasury empty and burdened with debt. “The BJP government indulged in wasteful expenditure and didn’t plan for long-term development,” he claimed, adding that his administration is now focused on transparent governance and rebuilding public trust.

Key Highlights from the Interview:

On GST: Sukhu described the GST system as unfair to smaller states. “States with larger populations and consumption get more share. Hill states with fewer people are suffering,” he said, reiterating the demand for revised compensation mechanisms.
On Industrial Policy: He called for special incentives for industries operating in difficult terrains. “Our cost of production is high due to transportation and lack of infrastructure. Without a tailored policy, industries won’t survive here,” he stated.
On BJP’s Role: The CM accused BJP leaders of engaging in political stunts rather than working for the state’s welfare. “When in power, they ignored these critical issues. Now they play politics even on disaster relief,” Sukhu added.
On Governance and Development: Sukhu underlined that his government is prioritizing environmental sustainability and employment generation. He said new investment policies are being framed with a focus on green energy and youth employment.
On Relations with the Centre: While stressing that he does not oppose the Centre for the sake of opposition, Sukhu demanded a fair federal structure. “Fiscal centralization is harming the federal spirit of the Constitution,” he said.

The Chief Minister also warned that if the revenue crisis continues, states like Himachal will find it difficult to fund basic development and welfare schemes. “We need justice, not charity,” he said, pressing for a dialogue on GST reform involving all stakeholders.

As Himachal navigates the dual challenges of fiscal stress and natural disasters, Sukhu’s remarks are a strong signal that smaller states may collectively push back against what they perceive as a raw deal under the current federal fiscal setup.

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