Former finance minister and CPM central committee member T M Thomas Isaac on Wednesday placed three questions before the panel constituted by the UDF government to draw up a 'white paper' on Kerala's finances.

"It is in a sense appropriate that the UDF wants to come out with a 'white paper', and I earnestly hope that the panel is able to carry out their brief in a realistic fashion," Isaac said. "Nonetheless, the 'white paper' should compulsorily answer three questions. And these are related to the charges Chief Minister V D Satheesan had raised during the election campaign to malign the LDF government," he said.

One, can the CM, who is also the finance minister, recover a sizable chunk of the revenue arrears of ₹25,000 crore?

"This figure has been bandied about by Sastheesan. He also kept saying that the LDF government had shown criminal negligence in recovering this amount. Satheesan's constant refrain was that collecting this backlog was enough to resolve the fiscal crisis," Isaac said, and asked rhetorically: "How much of this arrears can be collected this fiscal?"

The revenue arrears are drawn from the Comptroller and Auditor General Report. The latest CAG report on Kerala's finances say that the arrears of revenue on March 31, 2024, was ₹24,462.50 crore. Of this, ₹6,880.85 crore has been outstanding for more than five years.

The LDF government's argument has been that the CAG's figure is an overestimation as it reflected the inflated tax claims imposed on trade and business by tax officials. Most of these claims are now in various courts. 

Over 55 per cent of the arrears (₹13,559.46 crore) have been chalked up to the State Goods and Services Tax Department 

Two, how much can Satheesan mobilise from gold trade? "As it stands, the annual GST revenue from gold is about ₹600 crore. Satheesan has claimed that considering the turnover of gold, the state could mobilise at least ₹15,000 crore annually as GST revenue from gold sales," he said. "The 'white paper' should tell us how much is the government is expecting from gold this fiscal," he added.

Fact is, it is hard to track gold sales after the GST regime came into existence in 2017. This is because, unlike other goods and services, gold trade does not require e-way bills. An e-way bill is an online bill generated for the transfer of goods from one state to another. It is a proof of trade, and no such proof exists for gold.

In 2018, when Isaac was the finance minister, he had argued without luck for e-way bills for gold. Experts say that without authentic sales figures it would be hard for a government to come up with a strategy to boost revenue from gold.

Three, what will the finance minister do to secure Kerala's IGST (Integrated Goods and Services Tax) share of ₹25,000 crore that is now locked up with the Centre? 

IGST is levied for inter-state trade, and the GST share of states in these transactions is initially collected by the Centre and later distributed to states. 

The Expenditure Review Committee appointed by the previous LDF government has said in its report that Kerala had lost ₹25,000 crore over the last five years due to failure in revising the IGST return forms.

As a consumer state, Kerala is eligible for 50 per cent IGST share of any item sold here. When a customer in Kerala buys an item manufactured in another state, the tax included in the price is received by the manufacturer in the other state. The manufacturer transfers the tax as IGST to the Central Government, which immediately pockets half of it. To secure its 50 per cent, Kerala has to apply with necessary documents.

"The Centre will have to first cooperate for Kerala to receive its IGST share," Isaac said. He wanted the 'white paper' to say how much of the unclaimed IGST that the new government would recover for Kerala in this fiscal. 

"The 'white paper' should have answers for all these three questions. It is also enough if the Chief Minister himself answers these questions," Isaac said, and perhaps unknowingly invoking actor Vijay's popular 'I'm waiting' punchline from the movie 'Kaththi', he added: "We are waiting."