Thiruvananthapuram: The State Fiscal Review Committee report has found that Kerala suffered a huge loss in the Integrated Goods and Services Tax (IGST) due to the shortcomings in the system. A concerted effort in the GST Council of the consumer states, including Kerala, is required to resolve this, the committee suggested. 

The 2020-21 report has been submitted to the Legislative Assembly by the Finance Department.

The report estimates that there has been a loss between Rs 20,000 and 25,000 crore from July 1, 2017 to 2020-21. Until June 2022, a compensation from the Centre was received. The committee warns that with the cessation of this compensation, the loss will increase. Earlier, information regarding this from the report had leaked, leading to a controversy. The report was submitted by a committee chaired by Prof D Narayana this June.

Kerala had welcomed the GST system believing that it would prove beneficial for the client states. However, it is the producer states that continue to profit from this, the committee assessed. The unavailability of IGST related data to the states is causing a hindrance to solving the problem.

Kerala had formed a committee to study this. Kerala had demanded information on intra-state trade in the GST Council. The Finance Department informed that the last GST council decided to handover the information.

Growth rate of debts higher than that of revenue

The committee observed that in the ten years from 2011-12 to 2019-20, the growth rate of Kerala’s debt was higher than the growth rate of domestic income. The debt growth in these 10 years was 14.53 percent while the economy grew at a rate of 9.26 percent.

The five-year debt to domestic income ratio from 2011-12 to 2015-16 rose from 24.56 percent to 28 percent. The Finance Commission had fixed it at 25 percent. In 2018-19, when Kerala suffered due to massive floods, the rate went up to even 31.58 percent.