The Kerala economic review-2023, which was tabled in the Assembly on Friday, said the state, where service sector drives the economy, has effectively reduced its revenue deficit to 0.88 per cent of the gross state domestic product (GSDP) for 2022-23 from 2.23 per cent of the GSDP in 2021-22.
Besides, the state’s fiscal deficit reduced from 3.99 per cent of the GSDP to 2.44 per cent of the GSDP during the period.
The review, tabled in the Assembly by Finance Minister K N Balagopal, attributed this achievement to the increase in the state’s own revenue and the reduction in revenue expenditure from the year 2021-22 to 2022-23.
“Similarly, there was a marginal increase of capital expenditure to total expenditure and the total outstanding liabilities of the state has reduced from 35.92 per cent in 2021-22 to 34.62 per cent in 2022-23. This shows that borrowing is effectively utilised for development purposes,” said the review report.
Outstanding public debt of the state at the end of 2022-23 was Rs 2,38,000.96 crore. The annual growth rate of public debt decreased to 8.19 per cent in 2022-23 from 10.16 per cent in 2021-22. The Public Debt-GSDP ratio also decreased from 23.54 per cent in 2021-22 to 22.75 per cent in 2022-23.
The report said the main sources of the state’s own tax revenue are state Goods and Services Tax, sales tax on petroleum and alcoholic liquor for human consumption, stamps and registration fees, state excise duties, motor vehicle tax and land revenue.
In 2013-14, the state’s own tax revenue was 65.06 per cent of the total revenue. It declined to 54.22 per cent in 2022-23 in the backdrop of general economic slowdown following the Covid-19 pandemic and other external and internal factors which influenced the state economy.
Lottery formed a major source for the state’s Own Non-Tax Revenue. In 2022-23, receipts from state lotteries were Rs 11,892.88 crore showing an annual increase of 66.69 per cent, compared to 2021-22 (Rs 7,134.93 crore). This constitutes 78.67 per cent of the total non-tax revenue of the state.
The structure of the economy and workforce participation in Kerala is perceptibly different from the rest of India. In India, the share of agriculture and allied activities in Gross Value Added (GVA) is 15.13 per cent for agriculture and allied activities. But that sector employed 45.80 per cent of the workforce during 2022-23.
However, in Kerala, there has been a large-scale withdrawal of workers from agriculture over the years, so its share in total workforce participation was 27.27 per cent only in 2022-23 and which contributed 8.97 per cent of the Gross State Value Added (GSVA) during 2022-23.
Besides, there was a sharp decline in the growth rate of agriculture and related activities. In 2021-22, growth rate of agriculture and allied activities was 4.91per cent. In 2022-23, it declined to 0.87 per cent.
In Kerala, where the manufacturing sector is yet to emerge as an engine of the economy, the report said the service sector continued to drive the state economy by contributing 62.62 per cent of the GSVA during 2022-23.
Among the major states, Kerala has an unemployment rate of 7.0 per cent as against the all-India level of 3.2 per cent. At the same time, Kerala is among the top ten states of India in terms of per-capita Gross State Domestic Product. Kerala’s per-capita GSDP was Rs 1,74,214 in 2022-23; the corresponding national average was Rs 1,15,746. In other words, average income per person in Kerala was 1.5 times the Indian average in 2022-23.
However, the review blamed the Union government saying that its policy initiatives posed a threat to the fiscal independence of the state. “Cessation of the GST compensation in June 2022, by the Union Government led to a decline in the state’s revenue. The annual loss due to discontinuation of GST compensation is around Rs 12,000 crore per year,” the report said.
It added, “The shareable tax entitled to Kerala has been consistently falling. The share of horizontal devolution has been shrunk to 1.92 per cent of the divisible pool by the 15th Finance Commission from 3.06 per cent by the 11th Finance Commission and 2.5 per cent by the 14th Finance Commission. Without consulting the states, the Union Government increased Cess and surcharges and such additional levies are not shared with the states.”