New Delhi: Jammu and Kashmir Chief Minister Omar Abdullah on Wednesday said that the proposed GST reforms could reduce the UT’s revenue by 10-12 percent, adding to the severe fiscal crisis as its public revenues have “collapsed” in the aftermath of the Pahalgam terror attack.
In his written speech circulated at the 56th GST Council meeting, he called for the establishment of suitable mechanisms to ensure the fiscal stability of states and union territories.
“The major sectors of the economy, like tourism, transport, construction, automobiles have come to standstill post April 2025. The proposed reform can further reduce our GST revenues by 10-12 percent. Hence as the Finance Minister of Jammu and Kashmir, I am of the opinion that establishing suitable mechanisms and safeguards for the fiscal stability of States and UTs is critical,” he said.
He highlighted the devastating impact of the event on the Union Territory’s (UT) economy and called for the Centre’s support to deal with the situation, particularly in view of the proposed GST rate rationalisation.
“We may go ahead with the rate rationalisation proposal, while devising a mechanism for compensating States/UTs for their fiscal stability and creating safeguards for translating the benefits from rationalization in the reduced prices to the masses of our country,” he said.
Abdullah stated that the GST reforms must consider the unique challenges faced by individual states and UTs.
He detailed how the local economy had been gaining renewed vigour before being “shocked” by the “Pahalgam incident” of April 2025. This event, and its aftermath, have brought major economic sectors—including tourism, handicraft, horticulture, and agriculture — to a standstill.
The chief minister also urged Union Finance Minister Nirmala Sitharaman- headed GST Council to address the “geopolitical challenges” facing the country and the severe fiscal pressures on his region following the terror attack.
He talked about substantial loss of jobs and businesses, and a decline in public revenues. The tourism, transport, construction, and automobile sectors have all been badly affected, and the departure of non-local workers has slowed infrastructure development.
After the Pahalgam incident, Abdullah said the UT is facing severe fiscal challenges as its revenues have declined considerably.
In J&K, he said enthusiastic participation by people was witnessed in the Parliamentary and Assembly elections last year but just as the economy started recovering , the Pahalgam incident occurred.
“Today, all the sectors of economic activity, including tourism, handicrafts, horticulture and agriculture are badly affected. The flight of non-local workers has slowed down development of infrastructure projects,” the chief minister said.
Fully endorsing the two-tier (5 and 18 percent) GST structure proposal, the chief minister said “my main concern is how do we ensure that this rate rationalisation eases the burden on the common man and makes these specific goods and services more affordable for the masses of our country.
“These often lead to classification disputes, inverted duty structures and compliance complexity. The recommendations of the Group of Ministers and the Union proposal deal with these distortions to a large extent and aim to minimize such aberrations. For the Trade and Industries, these will bring clarity, reduce litigations, and enhance compliance. Hence, I welcome and support the recommendations of the Group,” he said.
“We need to have systemic safeguards to assure us that the proposed rate changes result in major benefits for the consumers and are not cornered in the chain. There should not be any scope for profiteering from this rate rationalisation,” Abdullah said.
The chief minister also touched upon national economic issues, noting that the country’s growth path is “suddenly challenged by geopolitical challenges” and also pointed to “whimsical trade policies of the colonial era” that he said could restrict India’s access to 20 percent of the global market, affecting thousands of workers in sectors like agriculture, handicraft, and gems and jewellery.
Asserting that the GST, introduced in July 2017, remains the most ambitious federal tax reforms in India’s fiscal history, he said through these eight years, several steps and initiatives have been taken in tax structure, administrative mechanism, and technology frontier to improve efficiency and revenue mobilisation from GST as also to facilitate honest taxpayers and dealers.
“The past year has been nothing but challenging for Jammu and Kashmir and for the entire nation. At the national level, we see our growth path suddenly challenged by geo-political challenges.
“Our economy is steadily accelerating at 6–7 percent growth rate. We have increased our export competitiveness and raised our share in global markets in goods and in services.
“Our forex reserves had quadrupled to USD 660 billion in the past two decades. But today we seek our market access being severely constrained by whimsical trade policies of the colonial era,” he said.
The chief minister said these policies will deprive us of about 20 percent of the global market and will seriously affect thousands of workers and entrepreneurs in the agriculture, handicraft, marine products, gems and jewellery sectors.
