Realising the full potential of GST reforms

TThe Prime Minister and the Minister of Finance, the goods and service tax (GST) only reduced the number of plates to 5% and 18%, gave Indian citizens a real Deepavali gift. This is also a strategic response to global trade uncertainty, for example, as a 50% tariff for Indian goods by the US, financial difficulties for states, because 6-8% of the collections are 5-6% of 5%, 5-6% of 12%, 70-75% from 18% and 13-15% from 28%. This exposes them to short -term income risks.

Andhra Pradesh has recently performed a strong financial performance, GST collections increased by 21% in August 2025, and reached a gross collection of 3,989 Crore. This floating, directed with improved compliance and expanding tax base, provides a strong foundation. However, some reports estimate that annual loss of income may vary between 1,500 CRORE to 7,000 Crore as a result of GST ratio deductions.

From these income losses, the supply side measures are required to provide a minimum effect for states. They will meet the increasing demand due to ratio interruptions. Without them, the expected increase in consumer demand may not be fulfilled by the supply side. Therefore, the state and the central government should actively implement the programs in order to maximize the benefits obtained from the GST rate deductions. Below are three examples to show this point.

First, the fall of GST in cement from 28% to 18% is an important victory for the real estate and construction industry, an important engine of economic growth. This segment is expected to reduce other switches such as marble, granite and sand lime bricks from 12%to 5%and total construction costs to 5%. This makes houses more suitable for consumers at a time when the demand for housing remains strong in large city centers.

However, the decrease in construction material costs will only strengthen the economy if it turns into a timely completion of the houses that are sanctioned under plans such as Pradhan Mantric Awas Yojana (PMAY). The Parliament’s response states that the completion rate within the scope of PMAY in the last five years is only 35% in Andhra Pradesh. For this reason, while the GST segment serves as a macro -level financial incentive, it is very important to effectively apply PMAY at the state level to cause these ratio cuts to be completed faster and in contrast to form concrete economic value.

Secondly, the GST rate, which falls from 12% to 5% in handicrafts, is an important life line for traditional tradesmen communities. In Andhra Pradesh, Kondapali wooden toys, ethicsoppaka toys and mangalagiri and Dharmavaram Sarees will benefit from the reduced tax burden that will make their products more suitable and competitive. However, the supply chain should be intact and well supported. The fund plan for the renewal of traditional industries is a key tool for providing the supply side support of the government. In the last five years, Sfurti has benefited from more than 2,18,000 craftsmen throughout the country, including 8,492 in Andhra Pradesh. According to the parliamentary response, the continuation of Sfurti is waiting for approval. As a result, a new offer is not approved. The full potential of GST reform in the hand weaving and handicrafts sector is at risk until the spurd is extended.

Thirdly, in agriculture, GST was reduced from 12% to 5% in various farm machines, while Sulfuric acid, nitric acid and ammonia, such as ammonia, decreased from 18% to 5% in switch fertilizer inputs. These measures promote lower input costs for farmers, thus promoting higher production. However, this increase in production will only create real economic value if the supply chain infrastructure is strengthened to address the increasing output. For example, the Agri infrastructure fund aims to provide infrastructure financing after harvesting. As of June 2025, only 66,000 Crore was used in all states despite the total debt financing facility allocated for each state and trade union region.

Only thanks to this synergistic approach, India combines the macro -level tax policy with the plan application on the ground.

Lavu Sri Krishna Devarayalu, Lok Sabha Deputy, Narcsaraopet; Şateen is a deepak legislative researcher