No tax hikes, 21% revenue growth: Kerala posts decade-best performance

THIRUVANANTHAPURAM: Kerala has recorded its strongest revenue growth in a decade without significant tax increases, while continuing expenditure on social welfare and infrastructure development. The state is heading towards its best revenue growth since the implementation of the Goods and Services Tax (GST), with tax revenue growth rising sharply in the months following the Onam season.

According to the Accountant General's half-yearly report for September, tax revenue growth, which stood at 2% in the month after Onam last year, increased to 19% during the corresponding period this year. The improvement has been attributed to increased activity in the retail market during the Onam season, improved consumer sentiment and the circulation of more money among the public. Kerala collected Rs 3,689 crore in GST revenue in October, compared with Rs 2,913 crore in October last year, registering annual growth of 27%. The corresponding national growth rate was 12.8%.

During the first six months of the V.D. Satheesan-led government's tenure, the state's tax revenue rose to Rs 23,272 crore, compared with Rs 19,395 crore during the corresponding period last year, marking an increase of 20%. The national growth rate during the same period was 15%. These gains were achieved without changes to the GST system or increases in tax rates.

Increased spending on infrastructure and welfare

The government has also sought to counter criticism over inadequate spending on infrastructure development. Capital expenditure increased by Rs 4,217 crore, representing a growth of 57%. Meanwhile, expenditure on social security pensions, the Priyadarshini free bus travel scheme, and the disbursement of salaries and pensions continued without interruption throughout the six-month period. Dearness allowance announced for government employees and pensioners was also disbursed.

Revenue growth at a glance

Own tax revenue

• Increase: Rs 6,486 crore

• Growth: 16.54%

Own non-tax revenue

• Increase: Rs 4,295 crore
• Growth: 71.96%

Total revenue

• Increase: Rs 20,000 crore
• Growth: 21.12%

GST revenue

October

• Current year: Rs 3,689 crore
• Previous year: Rs 2,913 crore
• Growth: 27%

First six months of the government

• Current year: Rs 23,272 crore
• Previous year: Rs 19,395 crore
• Growth: 20%

The government has adopted a Keynesian economic approach, seeking to increase revenue by stimulating the market rather than raising taxes. This has led to the improved performance, and the approach will continue, said V.D. Satheesan, who is also in charge of the Finance Department. The government will complete six months in office on November 18, after which major changes will become visible, he added.