Kerala's Revenue Concerns Amid GST Rate Rationalisation

In a pressing meeting with the 16th Finance Commission, Kerala Finance Minister K N Balagopal vocalized the state's anticipated revenue shortfall arising from the recent GST rate adjustments. The restructured tax framework, introducing a simplified two-rate system of 5 and 18 per cent, is anticipated to decrease prices broadly, yet it presents significant fiscal challenges for Kerala.

Balagopal highlighted the staggering annual revenue loss estimated between Rs 8,000 and 10,000 crore, primarily impacting goods revenue by Rs 6,300 crore. Additionally, he flagged the detrimental financial impact from US-imposed tariffs on Kerala's export sector, including a hit of Rs 2,500 crore affecting marine products and spices. The minister is optimistic that the Finance Commission, headed by Chair Arvind Panagariya, will address their predicament justly.

The state's share from the divisible tax pool has drastically decreased, from 3.87 per cent at the time of the 10th Finance Commission to 1.92 per cent in the 15th. Balagopal pressed upon the need for development justice, urging that Kerala requires fair consideration in the allocation of financial resources. The Finance Commission's deliberations are keenly awaited, with a report expected by the end of October.

(With inputs from agencies.)