The Goods and Services Tax (GST) infused in fresh life to many companies, sectors and businesses. But did it do any good to the infrastructure sector, is the larger question.
The implementation of GST was followed by a considerable surge in cost which has made the growth of infra projects rather sluggish.
Government Project Prices rise by 15%
Ambitious projects initiated in Rajasthan have been subjected to an escalation in cost. The cost of the elevated road and Jaipur Metro Phase I (B) is expected to rise by 12-15%.
Cannot continue at previous cost, firms say
Simplex Infrastructure Ltd. (SIL), the infrastructure firm contracted for the projects already expressed its dissent to continue operations at the existing cost.
The estimated cost of the elevated road between Ambedkar Circle and Sodala is Rs 250 crore, which has now increased by almost 12% i.e. an additional cost of over Rs 25 crore will have to be borne by the state government or the contractor, subject to the contract conditions.
Jaipur Metro – an additional Rs 100 crore
In the wake of GST, the cost of Jaipur Metro Rail Corporation (B) has surged by approximately Rs 100 crore. The infra company handling this project has pegged the cost of the project at Rs 1,126 crore, which shall include the cost of constructing 2.4 km underground corridor between Badi Chaupar and Chandpole.
Benefits to Awarded firms
The metro project was exempted from the payment of Value Addition Tax (VAT) and Entry Tax. Not only this, the various purchases made by the firm for the purpose of metro construction were exempted from taxes.
“There will be uniform policy for all the infrastructure projects and it is possible that the state government will revoke the tax exemption after GST,” a senior JMRC official said.
