Kerala economy updates
Gross State Domestic Product
The Gross State Domestic Product of Kerala for 2019-20 (at current prices) is estimated to be Rs 8,75,514 This is 13% higher than the revised estimate for 2018-19.
Trends in economic growth
The quick estimate of Gross State Domestic Product (GSDP) at constant (2011-12) prices is ₹5,13,69,589 lakh in 2017-18 as against the provisional estimate of ₹4,79,28,990 lakh in 2016-17, registering a growth rate of 7.18 per cent in 2017-18 compared to 6.22 per cent in 2016-17 (Figure 1.1). At current prices, the GSDP is estimated at ₹6,86,76,443 lakh (quick estimate) in 2017-18 as against the provisional estimate of ₹6,16,35,704 lakh in 2016-17 showing a growth rate of 11.42 per cent. (Economic review 2018)
Total expenditure
Total expenditure for 2019-20 is estimated to be Rs 1,41,980 crore, a 13.9% increase over the revised estimate of 2018-19. In 2018-19, there is estimated to be a decrease of Rs 2,415 crore (1.9% of the budgeted estimate) of expenditure as per the revised estimate. (Budget 2019-20)
Total receipts
Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 1,15,690 crore, an increase of 14.6% as compared to the revised estimate of 2018-19. In 2018-19, total receipts (excluding borrowings) are estimated to fall short of the budgeted estimate by Rs 2,144 crore (2.1%). (Budget 2019-20)
Kerala Flood Cess
The GST Council had permitted the state to levy 1% cess on supply of goods and services for up to two years for rebuilding Kerala. Except gold, this cess will not be levied on goods with GST rate of 5% or below. Small dealers who have availed composition tax will be excluded from the levy of cess. For supply of goods which are taxed at 12%, 18% and 28%, and on all services, 1% flood cess will be imposed on the value of supply. An additional revenue of Rs 600 crore is expected through this cess.
Tax proposals
Local bodies have been permitted to levy 10% entertainment tax on cinema tickets. The one-time tax on new motor cycles, motor cars, and private service vehicles used for private purpose will be increased by 1%. The tax rate on the first sale of foreign liquor will be increased by 2%. (Budget 2019-20)
Infrastructure projects
Rs 1,000 crore has been earmarked for Rebuild Kerala initiative. An outer ring-road on the Parippally-Vengod-Aruvikkara-Vizhinjam route, and an allied growth corridor have been proposed around the Vizhinjam Port.
Per capita income
As per the quick estimates, the per capita GSDP at constant (2011-12) prices in 2017-18 was ₹1,48,927 as against the provisional estimate of ₹1,39,645 in 2016-17, recording a growth rate of 6.65 per cent in 2017-18. At current prices, the per capita GSDP in 2017-18 was ₹1,99,101 registering a growth rate of 10.87 per cent over the previous year’s estimate of ₹1,79,580.
At constant (2011-12) prices, the quick estimates of per capita NSDP in 2017-18 was ₹1,36,225 as against the provisional estimate of ₹1,27,729 in 2016-17, recording 6.65 per cent growth in 2017-18. Figure 1.2 shows that between 2012- 13 and 2017-18, the per capita NSDP at constant prices was higher than the per capita NSDP at all India level. (Economic review 2018)
Unemployment
According to the 5th Annual Employment-Unemployment Survey (2015-16), among the major states, Kerala has the highest unemployment rate at 12.5% as compared to the all-India level of 5%.
Revenue deficit
It is the excess of revenue expenditure over revenue receipts. A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets.
The budget estimates a revenue deficit of Rs 8,770 crore (or 1% of GSDP) in 2019-20. This implies that revenue receipts are expected to be lower than the revenue expenditure, resulting in a deficit. The 14th Finance Commission had recommended that states should eliminate revenue deficits. The 2019-20 estimates for Kerala suggest that the state will not be meeting this target of eliminating revenue deficit.
Fiscal deficit
It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities. In 2019-20, fiscal deficit is estimated to be Rs 26,291 crore, which is 3 % of the GSDP. The estimate is equal to the 3% limit prescribed by the 14th Finance Commission. This limit may be relaxed to a maximum of 3.5%, if states are able to contain their debt and interest payments to certain specified levels.
Grants-in-aid and contributions to local governments
The state government provides compensation and assignments to local bodies and Panchayati Raj institutions. In 2019-20, this amount is estimated to be Rs 9,948 crore. This is a 33% increase from the revised estimates of 2018-19. The table below shows the past trends in grants given to local governments, and their development expenditure.
Total revenue receipts
The total revenue receipts for 2019-20 are estimated to be Rs 1,15,355 crore, an increase of 15.4% over the revised estimates of 2018-19. Of this, Rs 80,855 (70% of the revenue receipts) crore will be raised by the state through its own resources, and Rs 34,500 crore (30% of the revenue receipts) will be devolved by the centre in the form of grants and the state’s share in taxes.
Non Tax Revenue
Kerala has estimated to generate Rs 15,070 crore through non-tax sources in 2019-20. Of this, Rs 11,873 crore will be received from state lotteries.
Tax Revenue
Total own tax revenue of Kerala is estimated to be Rs 65,785 crore in 2019-20. The composition of the state’s tax revenue is shown in Figure 2. The tax to GSDP ratio is targeted at 8% in 2019-20, which is in the same range as the revised estimate of 7% in 2018-19. This implies that growth in collection of taxes has been at par with the growth in the economy.
State Goods and Services Tax (SGST) is the largest component of tax revenue of the state. It is expected to generate Rs 29,011 crore in 2019-20. This is an increase of 27% from the revised estimates of 2018-19.
Agriculture Sector (Budget allocation, 2019)
- An amount of INR 70 Crores has been announced for factories producing coconut-based products.
- A budget of INR 41 Crores has been granted for the Kerala Agricultural University (KAU) in Thrissur and INR 45 Crores for Kerala University of Fisheries and Ocean Studies (KUFOS).
- INR 500 Crores has been announced to support the prices of rubber.
- The cities of Thrissur, Palakkad and Alappuzha are to have rice parks as a part of the Budget.