The Economic Review Report was tabled by finance minister Thomas Isaac in the Assembly on Thursday. Thiruvananthapuram: Kerala was optimistic about a 'positive' turnaround in its revenue growth once the present issues in Good and Services Tax (GST) are resolved, according to the state Economic Review 2017.
"Once the current issues in GST system are resolved, the state is optimistic about a positive turnaround in its revenue growth and revenue-led fiscal consolidation can be restored sooner rather than later', the report tabled by finance minister Thomas Isaac in the Assembly on Thursday said.
GST was a 'destination tax' and Kerala being a consumer state had hoped that it would fetch more tax revenue for the state and achieve the desired growth of over 20 per cent in tax revenues in the years to come.
Moreover, considering share of service sector in the state GDP, the benefit of GST to the state is expected to be "more enormous", the report stated. However, the implementation of the GST, described as the one of the landmark tax reforms in the post independent history of India, has been beset with numerous problems particularly with regard to IT backbone. The report also said state's total debt liabilities in 2017-18 was Rs 207,026.81 crore.
Unexpected currency scrapping exercise had hit hard the revenue buoyancy of Kerala in an 'unprecedented' manner, the report stated. Purchasing power and economic activity in the state, particularly in the traditional sectors and in cooperative banking sectors were severely affected by demonetization, the report said. Implementation of 10th pay revision, clearance of huge amount of contingent liabilities left over by the previous Congress-led UDF government and disbursement of social security pensions with long pending arrears were also the major reasons for the slip in fiscal indicators during 2016-17.
The state has always been proud of its high growth in state GDP with regard to the national average. However, according to the latest statistics of Central Statistical Organisation, the state GDP growth are not very encouraging in this regard.
The growth in the state economy now lags behind the national average for the first time. The growth of State Domestic Product, which consistently stood above the national average, began to show a declining trend from 2012-13 and further deteriorated to 8.59 per cent in 2015-16, when the national average stood at 9.94 per cent. According to data furnished by State Level Banker's committee, the total NRI deposit in public sector banks in Kerala (as on March 2017) was Rs 83,855 crore while the private banks accounted for Rs 68,493 crore.
The inflow of NRI deposits increased by 12 per cent from Rs 135,609 crore in March 2016 to Rs 152,349 crore in March and Rs 154,252 crore by June last year.
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