SHIMLA, Sept 28 — The Himachal Pradesh government on Saturday defended its decision to raise cement prices by ₹5 per bag, saying the increase was necessary to cope with mounting revenue losses after the Goods and Services Tax (GST) Council slashed the tax on cement from 28% to 18%.
Technical Education and Town and Country Planning (TCP) Minister Rajesh Dharmani said the tax cut has cost the state nearly ₹1,000 crore, worsening the financial situation of a disaster-battered economy. “This decision benefits big states where consumption is higher, but small hill states like Himachal, Jammu and Kashmir, Uttarakhand and those in the Northeast are the worst sufferers,” he told reporters.
Dharmani explained that before GST was rolled out in 2017, revenue under the VAT regime grew at around 16%. After GST implementation, growth dropped to 7–8%. The GST Council had assured compensation until states reached 16% growth, but the cess was withdrawn in June 2022. “Without that support, Himachal has been left with fewer resources to manage its finances,” he said.
The minister pointed out that the state has already borne losses of about ₹16,000 crore due to the 2023 monsoon devastation and faces a revenue deficit of ₹17,000 crore up to July 2025. He said the GST cut on cement alone would cost Himachal ₹150–200 crore annually. “Opposition leaders should understand the financial matrix before raising hue and cry over a ₹5 increase in cement prices,” Dharmani remarked.
Further, he said the 56th GST Council meeting introduced rationalisation measures that added to the burden on small states. The council scrapped the 12% and 28% slabs, imposed a 40% tax on sin goods, and shifted most items in the 12% bracket to 5%, while exempting insurance services. According to Dharmani, these changes will lead to an additional revenue loss of about ₹300 crore for Himachal.
“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,” he added.
