Economy to hurt if states not compensated for GST loss: Kerala FM

Kerala faces a likely annual revenue loss of ₹8,000-10,000 crore due to the reduction in goods and services tax (GST) rates across segments that was announced by the GST Council on Wednesday, Kerala finance minister K.N. Balagopal said.

- Gireesh Chandra Prasad

Kerala faces a likely annual revenue loss of ₹8,000-10,000 crore due to the reduction in goods and services tax (GST) rates across segments that was announced by the GST Council on Wednesday, Kerala finance minister K.N. Balagopal said. Almost all states will face a revenue squeeze, he said, and if the central government does not address their revenue losses, it will have a negative impact on the broader economy.

Kerala had budgeted ₹46,563 crore of GST revenue in FY26, estimating a 12.5% annual growth. Addressing the media, Balagopal said while economic theory suggests, and a point also made by the Centre, that improved consumption demand arising from the tax cuts would fuel revenue buoyancy, the same will actually depend on state-specific consumption patterns.