Debt-ridden Kerala eyes GST bailout
February 02 2018 12:24 AM
Congress workers celebrate in Bikaner yesterday after the party won in the Lok Sabha constituencies of Ajmer and Alwar and the Mandalgarh Assembly seat in Rajasthan.

By Ashraf Padanna/Thiruvananthapuram

Kerala’s public debt has increased sharply under the Left Democratic Front (LDF) which came to power in the state 21 months ago. Both the revenue and fiscal deficits have also gone up during this period, indicating poor management of finances. 
The revenue deficit went up from 1.73% in 2015-16 to 2.51% in 2016-17 and fiscal deficit from 3.19% to 4.29%. The economic review presented in the state assembly yesterday, on the eve of the annual budget, does not show a rosy picture on any indicators.
The government now pins its hopes on the new Goods and Services Tax (GST) regime adopted federally last year.
Interestingly, the burden on the public exchequer increased not on account of development activities but revenue expenditure mainly for paying salaries, pensions and debt servicing.
While the average growth of debt during the entire five years under the previous regime was 14.88%, it grew by 18.48% during the last fiscal year.
The public debt estimated for 2017-18 is Rs2.07tn. The growth rate of the state’s own tax revenue also showed a declining trend for the last couple years. While it grew around 25% in 2013-14, the growth declined to 8.16% last year.
“The introduction of GST is one of the landmark tax reforms in the post-independent history of India,” it says. 
“It is widely presumed that introduction of GST would augment efficiency in economic activities and would benefit the state in the enhancement of indirect tax proceeds, once the technical glitches encountering in the initial phase of introduction of the new tax regime are cleared.”
It says Kerala being a consumer state has every reason to hope that GST would fetch more tax revenue for it and achieve desired growth of more than 20% in collections. 
“Moreover, considering the share of service sector in the state GDP, the benefit of GST to is expected to be more enormous. Once the current issues in GST system are resolved, the state is optimistic about a positive turnaround in its revenue growth,” it says.
“The state government has already succeeded in creating an ambience for attracting large-scale investments in major infrastructure projects through innovative financial instruments.”
The document also shows sharp regional disparities in growth. While Ernakulam district has a per capita income of Rs162,297, the figure stood at Rs 95,715for Wayanad. The state average is Rs 123,707.
Kollam stands second with Rs136,282, followed by Alappuzha (Rs143,542), Thrissur (Rs135,518), Idukki (Rs135, 316), Kottayam (Rs132,265), Thiruvananthapuram (Rs129,137), Kannur (Rs116,982), Kozhikode (Rs113, 307), Kasaragod (Rs105,555), Palakkad (Rs103, 855) and Pathanamthitta (Rs103,460).

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