Hyderabad: If Telangana Chief Minister K. Chandrasekhar Rao had hoped his support to the BJP on issues such as demonetisation, presidential polls and the Goods and Services Tax (GST) would be sufficient to buy peace and ensure quid pro quo from the BJP leadership and central government, he is in for a big disappointment.

On the one hand, the Central government has only partially accepted Telangana’s demand to exempt the state’s ongoing development projects from GST. On the other, BJP is gearing to turn up the political heat on the Telangana Rashtra Samiti (TRS) by raising thorny issues — including the official celebration of Hyderabad’s integration into India.

While the Telangana government had demanded GST should not be imposed on state projects, such as irrigation and housing, the GST council has decided to only reduce it from 18 per cent to 12 per cent revoking a strong disapproval from the chief minister.

Soon after the GST council’s decision was announced, KCR adopted a strong stand and decided to write a letter to the prime minister. On his instructions officials of finance department prepared a detail report assessing the impact of 12 per cent GST resulting in a huge financial burden on the state finances and affect the development programmes.

Originally the Centre had fixed the GST on the state programmes at 18 per cent resulting in a tax burden of Rs196 billion (Dh11.3 billion) and following the recent decision it has come down by 6 per cent.

Telangana officials suggest that if the GST on these programmes was reduced to 5 per cent, the state will be able to save another Rs100 billion.

The tender process of many projects was also getting delayed as major contractors were apprehensive of GST and were not coming forward to take part in it.

After KCR threatened confrontation, Union Minister of State Bandaru Dattayreya had assured the chief minister that the Centre would revise the GST rate.

Following the assurance, the chief minister said his government would adopt a wait and watch policy as GST was an experiment.

Meanwhile, a new round of trouble seems to be brewing between the TRS and the BJP.

While it has become an annual ritual of sorts of the BJP to demand that the September 17 should be officially celebrated by the state as Hyderabad Liberation Day marking the merger of Nizam dominion into Indian union through military action in 1948, this year the BJP has decided to organise a big public meeting to mark the occasion and use it to kick off its election campaign.

These developments were likely to add new irritants between the two parties apart from pouring cold water on the plans of TRS to forge closer relations with Narendra Modi government.