Estimated earnings off mark from Kerala’s actual revenue

THIRUVANANTHAPURAM: Exposing the inaccuracies in anticipating and collecting revenue of the state, the figures in the last five years from 2016 to 2021 show that the difference between estimated earnings and actual earnings is a whopping Rs 72,608.54 crore.
The government has been citing multiple reasons for not being able to meet the estimated figures, but the widest gap between the estimated and actual revenue was as high as Rs 25,130.04 crore in the financial year 2019-20. The estimated earnings for 2019-20 was Rs 1,15,354.71 crore, and the actual earnings were only Rs 90,224.67 crore that year. This huge gap in 2019-20 was despite former finance minister T M Thomas Isaac, in his budget speech, predicting an increase of 30% in the revenue earnings for 2019-20.

Finance minister K N Balagopal said in the assembly last week that the crisis that emanated from the unexpected demonitization and the technical issues that surfaced when the goods and services tax was implemented had adversely affected the revenue earnings of the state. In addition, the finance minister also cited the floods of 2018 and 2019 and the Covid-19 pandemic as crucial factors in revenue earnings reduction.
Interestingly, when the LDF government came to power in 2016, Isaac in his white paper had cited lapses of the UDF government in collecting revenue as the reason for shortcomings in earnings to the tune of Rs 30,000 crore. However, regarding the huge gap in the last five years, sources cite insufficient preparations by the state government while switching over to the GST system and lapses in collecting the tax dues, including VAT dues, as reasons for this difference in revenue earnings.
Amidst the shortage in revenue earnings, the net public debt of the state had increased in the last one year by 9.6% than the projected figures in the revised budget estimates for 2020-21. The net public debt had increased from Rs 30,499.97 crore as anticipated in the revised budget estimates to Rs 33,429.88 crore, showing an increase of Rs 2,929.91 crore. Though the expenditure of the state was projected as Rs 1,28,382.63 crore in the budget estimates, the actual expenditure for 2020-21 had closed at Rs 1,41,946.24 crore, a difference of Rs 13,563.61 crore.
Excluding state GST, sales tax and VAT, the state had earned Rs 3,375.50 crore from stamps and registration in the Covid-19 year, more than the anticipated Rs 3,061.98 crore in the budget estimates. The state also earned Rs 3,272.91 crore, only marginally less than the estimated Rs 3,367.11 crore, from motor vehicle tax in the last financial year.
As the expenditure remains as expected but the revenue receipts not meeting expectations, the state will face a grim financial situation unless there is more financial discipline, sources said.