At any level of government, revenue mobilization is the sine-quanon of growth and development. In Kerala, even though rate of growth of Gross State Domestic Product is quite high during normal years, it is not accompanied by commensurate growth in revenue realization. Perhaps from the British regime onwards Travancore and Cochin registered poor revenue mobilization compared to other areas of India. Thomas (2021) observed that, "In most states, land revenue is the mainstay of the state fisc and is responsible for about a third of the total revenue (Hyderabad 36%, Baroda 36%, and Indore 49%). The corresponding percentage in British provinces are Madras 30%, Bombay 27%, and Bengal 25%. Land revenue plays a smaller part in the maritime states (Travancore 13.7%, Cochin 12%)".                              (Thomas E.M, 2021)¹. From the above observation, we get some glimpses of the Past performance of major part of Kerala with regard to land revenue mobilization. Land scarce Kerala has high land revenue potential. However the lion's share of it has been untapped for more than a century. Chelliah (1996) ² pointed out that the revenues of Central and State governments have increased over the period, but rate of growth of revenue expenditure is faster due to inefficiency, extravaganza, corruption and many other reasons (p.115). Undemocratic, populist election winning benefit transfers may be added to these "other reasons". Revenue realization is adversely affected in Kerala also due to low tax buoyancy caused by defective tax structure, tax avoidance, evasion, poor compliance, inefficient and corrupt tax administration etc. It is to boost up tax buoyancy that Goods and Services Tax (GST) was introduced in India from July 1st, 2017. However the Tax Expert Scheme (2017) concluded that "India is the first country to implement GST with considerably less clarity regarding the intricacies in its proposed structure, transitional arrangements, administration and procedures, and framework to contain inflammatory ramifications"(p.168). This observation throws light into the reasons why GST revenue falls short of expectations or potential in the GST era.

Revenue profile of the state

National policies like demonetization (Nov. 2016), introduction of Goods and Services Tax (July 1, 2017), the Ockhi cyclone (2017), devastating flood of 2018, the spread of Nipah Virus, outbreak of Corona virus in 2020 and its drastic spread in 2021, etc. have all adversely affected the normal functioning of the state economy. When revenue requirements increased, revenue receipts declined to levels previously unheard of in the past. The implementation of GST imposed restrictions on states in raising state level taxes. Delay in getting GST compensation, reduction in Central assistance schemes after the 14th Finance Commission Award have added fuel to fire. Let us examine the revenue realization of Kerala during selected years.

When we examine Row-17 of table 1 which tells upon the rate of growth of GSDP, discernible slowdown in growth is visible from 2019-20 onwards on account of reasons stated elsewhere. Row-2, gives account of the rate of growth of revenue receipts. Since the growth figures of GSDP are low and fluctuating, rate of growth of revenue receipts does not give an accurate picture. Sometimes base effect of low and negative GSDP growth gives an exaggerated picture of revenue growth. At the same time State's own tax revenue (row 6) growth rate gives a more or less accurate picture. It showed a decline from 10.15 per cent to 8.80 per cent in 2018-19. This could be due to the impact of demonetization and the hasty implementation of GST. The decline has been much sharp during the year 2019-20 (from 8.80 per cent to -0.063 per cent) and this could be the after effect of devastiating flood. The decline continued in 2020-21 (-5.29 per cent), an impact of the spread of Corona virus. Devolution from the Center unlike what the state claims, is on a higher range from 2020-21, as the table 1 depicts.

Table 1: Revenue Indicators and its Rate of Growth: Kerala (Selected Years in Rs. Crores)