SUMAN K SHRIVASTAVA
Ranchi, Nov 4: The latest goods and services tax (GST) data released by the Ministry of Finance paints a contrasting picture of eastern India’s post-rationalisation economy. While the country’s overall GST revenue for October 2025 grew by 4.6 % year-on-year to ₹1.96 lakh crore, Jharkhand recorded a sharp 15 % (Rs 456 crore) decline in its GST collection, signalling a worrying dip in fiscal momentum. In contrast, Bihar registered a 3 % increase, underscoring how the GST rationalisation impact has played out unevenly across states.
Jharkhand’s finance minister Radha Krishna Kishore already flagged that the state expects significant revenue loss due to the rationalisation. He has sought additional compensation from the Centre to offset revenue shortfalls triggered by the tax rate changes.
Jharkhand’s 15 % GST dip: A reflection of structural challenges
According to government estimates, Jharkhand collected around ₹2,518 crore in October 2025, compared with ₹2,974 crore a year earlier—a fall of roughly 15 %. Officials attribute this Jharkhand GST collection drop to multiple factors:
GST rationalisation impact: The recent restructuring of GST slabs, aimed at simplifying the tax regime, has lowered rates on several goods and services. For manufacturing-heavy states like Jharkhand—where production far exceeds local consumption—this has meant reduced taxable turnover within state borders.
Industrial composition: Jharkhand’s economy relies heavily on coal, steel and minerals, 75–80 % of which are consumed outside the state. This limits the tax captured at the destination, compared to consumption-driven states.
Muted local demand: The state’s per-capita income remains among India’s lowest, and subdued consumer spending has softened revenue inflows.
Refund and settlement delays: Industry insiders say input-tax refunds and settlement lags have further dampened the state’s net collection in October.
Bihar’s 3 % rise defies early scepticism
Neighbouring Bihar, by contrast, has reported a modest 3 % growth in GST receipts for October 2025, a performance that has surprised many. The state’s steady expansion in consumer goods, retail trade, and small-scale services helped it avoid the slide that affected its mineral-rich neighbour.
Economists note that Bihar’s showing comes 25 years after the bifurcation of undivided Bihar in 2000, when sceptics claimed the residual state would be left with “only balu and Lalu”—a colloquial reference to sand and politics. Instead, the Bihar GST growth story demonstrates gradual strengthening in the Jharkhand–Bihar economy, driven by services, construction, and rising urban demand.
Industrial giants lead the pack
In contrast to Jharkhand’s decline, industrially advanced and consumption-driven states such as Maharashtra, Gujarat, and Karnataka have gained from buoyant demand and improved collections.
Gujarat recorded a 16 % rise in GST collection in October 2025, touching ₹7,127 crore, fuelled by festive demand, robust exports, and improved tax compliance.
Maharashtra maintained its position as India’s top GST contributor, with collections remaining strong amid broad-based consumption across industries and cities.
Analysts say these states benefit from diversified tax bases, better digital enforcement, and higher value-added consumption, cushioning them from the rate-cut-related revenue impact.
On the other hand, resource-oriented states like Jharkhand and Chhattisgarh are seeing lower accruals as production moves out of the tax net more quickly than consumption enters it.
Fiscal experts suggest that the central government may need to consider a recalibrated compensation mechanism or transitional support to ensure equity among states as GST rates stabilise.
The road ahead for the Jharkhand–Bihar economy
While Jharkhand faces a near-term revenue squeeze, economists argue that strengthening internal demand and expanding the services sector could help stabilise its finances. Bihar’s case, though modest in growth, highlights how investment in consumer-led sectors can insulate states from the volatility of industrial revenue.
As India’s tax base evolves post-rationalisation, the diverging fortunes of these two eastern neighbours serve as a reminder that economic resilience depends not just on production capacity, but on the vibrancy of local demand.
