Amid heated political debate over Kerala’s fiscal health, the State’s new Congress-led United Democratic Front (UDF) government has outlined certain measures, including a revamp of the Goods and Services Tax (GST) department, for improving tax collection, the planning process and overall fiscal position.

The proposals are part of the Vision 2031 roadmap cleared by the State government. Although the previous Left Democratic Front (LDF) government had restructured the GST department, the UDF, then in Opposition, had termed it sloppy, delayed and ineffective.

According to the proposals, the government will take steps to resolve the knotty problem of Integrated GST (IGST) settlement. It may be recalled that in 2024, the 6th Kerala Public Expenditure Review Committee had stressed the need for Kerala to pay close attention to the IGST mechanism, observing that the present system causes revenue loss for the State. The panel had, based on certain assumptions regarding value addition within Kerala and the returns filing behaviour of traders, estimated the gross loss in IGST from July 1, 2017 till then to be in the range of ₹20,000 crore to ₹25,000 crore.

Intelligence, audit wings to be strengthened

Steps will be taken to strengthen the GST intelligence and audit wings and to increase GST registration, according to the government’s proposals formalised through a May 22 order issued by the Programme Implementation, Evaluation and Monitoring department. The Audit department will be strengthened and more public sector enterprises will be brought under its ambit, it said.

In the area of planning and economic affairs, the new government proposes to “strengthen” the Kerala State Planning Board. The government proposes to establish a quasi-judicial body to resolve disputes regarding projects. The Chief Minister will chair a panel that will review projects and ensure timely implementation. The government also aims at introducing more transparency in the mobilisation of financial resources for large projects. With respect to the Budget, the government plans to publish performance assessment reports on the annual Budget twice a year. Steps will also be taken to avoid unnecessary expenditure, according to the document.

Amid the UDF-LDF verbal exchanges over the condition of the State treasury, Chief Minister V.D. Satheesan, who is handling the finance portfolio, had announced plans to publish a White Paper on the State’s fiscal health. The government has also formed a panel headed by former Union Cabinet Secretary K.M. Chandrasekhar for the purpose. The UDF government’s Vision 2031 contains 1,291 items across departments, including five ‘Indira guarantees,’ and five dream projects.