Senior economist M.A. Oommen has said that Keralam needs to expand its tax base, particularly through value-added taxation. He also recommended the preparation of an approach paper setting out the State’s priorities and objectives for the next five years.
Speaking at a national conference on ‘Second Generation Reforms in Goods and Services Tax (GST) in India: Implications for State Finances and Fiscal Policy’ organised by the Gulati Institute of Finance and Taxation (GIFT) in Thiruvananthapuram on Tuesday (September 8, 2026), Prof. Oommen said Keralam’s economic potential had to be matched by a stronger effort to enhance the State’s tax base. Referring to the scale of goods entering the State, he said more than 14 lakh trucks arrive in Keralam every month to deliver goods for consumption.
He also drew attention to the magnitude of remittances flowing into Keralam. Citing the Kerala Migration Survey, he said the total remittances to the State in 2023 amounted to ₹2.17 trillion, compared with the total expenditure of ₹1.59 trillion by the State government in 2023-24.
Prof. Oommen was felicitated on the occasion.
Kerala State Planning Board vice-chairperson K.M. Chandrasekhar, who presided over the inaugural session, said Keralam had initially expected to benefit substantially from GST considering it is a destination-based tax. The removal of barriers to the movement of goods was expected to benefit traders and simplify commerce. However, the GST system has not stabilised fully even after several years, he pointed out.
According to him, technological infrastructure remains a work in progress, transfers of Integrated Goods and Services Tax (IGST) to States are not always timely, and there is still no satisfactory mechanism for resolving disputes between States or between Centre and States. The complexity of the system has also imposed a considerable burden on traders, who often have to depend on tax consultants, he pointed out.
Tax evasion
Inaugurating the conference, Transport Minister C.P. John stressed the need to improve GST collection in Keralam and strengthen mechanisms to detect tax evasion.
He said the Transport department had a direct connection with GST because of the large volume of goods transported across the State. He pointed out that the seamless movement of goods after the abolition of check-posts had brought significant benefits, but also created challenges in monitoring goods and preventing evasion.
He called for better use of vehicle-fleet and goods-monitoring systems to close gaps in enforcement. Strengthening such systems would be among the government’s priorities for increasing tax revenue.
Additional Chief Secretary (Finance and Taxes) K.R. Jyothilal, International Monetary Fund (IMF) Senior Economist Arbind Modi and GIFT Director K.J. Joseph spoke on the occasion.
Published – September 08, 2026 11:15 pm IST
