The Himachal Pradesh government has justified its decision to increase cement prices by ₹5 per bag, arguing that the move is necessary to partially offset the massive financial losses incurred after the Goods and Services Tax (GST) Council reduced tax on cement.
Technical education and town and country planning (TCP) minister Rajesh Dharmani said on Saturday that the GST cut from 28% to 18% has cost the state nearly ₹1,000 crore in direct revenue loss, hitting the already disaster-battered economy hard. “This decision benefits big states where consumption is higher, but small hill states like Himachal, J&K, Uttarakhand, and those in the Northeast are the worst sufferers,” he said.
Dharmani noted that under the VAT regime, the state’s revenue was growing at around 16%, but after GST was implemented in 2017, growth fell to 7–8%. He pointed out that although the GST Council had promised compensation until states reached 16% growth, the cess was withdrawn in June 2022, leaving Himachal with fewer resources.
The minister said the state has already suffered losses of around ₹16,000 crore due to the 2023 monsoon mayhem and is facing a revenue deficit of ₹17,000 crore up to July 2025. “Alone due to the GST cut on cement, the state will lose ₹150–200 crore annually. Opposition leaders should understand the financial matrix before raising hue and cry over a ₹5 increase in cement prices,” he added.
{{/usCountry}}The minister said the state has already suffered losses of around ₹16,000 crore due to the 2023 monsoon mayhem and is facing a revenue deficit of ₹17,000 crore up to July 2025. “Alone due to the GST cut on cement, the state will lose ₹150–200 crore annually. Opposition leaders should understand the financial matrix before raising hue and cry over a ₹5 increase in cement prices,” he added.
{{/usCountry}}Dharmani said that in the 56th GST Council meeting, rationalisation measures further impacted Himachal’s finances. The council scrapped the 12% and 28% slabs, introduced a 40% tax on sin goods, and shifted most items in the 12% slab to 5%. Insurance services were also exempted. This rate restructuring, he said, would cause Himachal an additional revenue loss of ₹300 crore.
“The GST rationalisation has put small states in a financial dip. Himachal has limited consumption potential despite strict compliance, and in the absence of compensation, our treasury is under extreme pressure,” Dharmani added.