Reports suggest that the central and Kerala governments have reached an agreement to waive GST on construction equipment for national highway projects. If the Kerala government agrees to waive GST, the central government is reportedly willing to bear the costs of land acquisition, which is traditionally the responsibility of the state. Union Minister for Road Transport and Highways, Nitin Gadkari, informed the Lok Sabha of this arrangement, stating that it would expedite the expansion of national highways.
Nitin Gadkari has also conveyed this proposal to Kerala Chief Minister Pinarayi Vijayan. The financial burden on the state government for land acquisition has significantly delayed highway expansion projects. Although Kerala was required to contribute additional funds for land acquisition, the state has so far allocated only ₹5,000 crore. However, given that land values in Kerala are approximately ten times higher than in other states, Nitin Gadkari suggested waiving GST on construction equipment to address the issue.
📍𝑵𝒆𝒘 𝑫𝒆𝒍𝒉𝒊
Reviewed the progress of ongoing National Highway projects in Kerala, along with the Chief Minister of Kerala, Shri @pinarayivijayan Ji, Kerala PWD Minister Shri @riyasdyfi Ji, and senior officials in Delhi today. pic.twitter.com/4mAz3DnPgu
— Nitin Gadkari (@nitin_gadkari) December 6, 2024
According to Gadkari, ₹95 crore is required to complete 1 kilometre of highway construction, while ₹50 crore is needed for the acquisition of 1 kilometre of land. The Union Government has proposed that the state waive its 9% share of the 18% GST on cement and steel, as well as royalty fees for river sand and other materials.
On 5 December, Nitin Gadkari assured the Lok Sabha that the Union Government is committed to national highway development and is prepared to allocate substantial funds, amounting to lakhs of crores. He acknowledged that land acquisition is significantly more challenging in Kerala than in other states. Kerala has informed the Centre that it cannot allocate more than ₹5,000 crore for land acquisition. Under these circumstances, the compromise to exempt GST and royalty fees was reached. The Minister also assured further cooperation on future projects. He added that once the Detailed Project Report (DPR) for the Kochi-Theni Greenfield Highway is approved, the project would commence promptly.
The Union Government’s generous stance highlights its commitment to Kerala’s development. However, the CPM-led ruling Left Democratic Front (LDF) and the state government continue to blame the Centre, alleging a lack of sympathy towards Kerala.
