A new controversy is brewing in the Kerala Assembly as the CAG highlighted the transfer of Rs 262.06 crore from the Chief Minister’s Distress Relief Fund to the Consolidated Fund, questioning financial management during the previous Pinarayi Vijayan government. The 2024-25 economic review report by the Comptroller and Auditor General, presented in the Assembly, flagged the irregular transfer that impacted the state’s revenue and fiscal deficit figures.
The disclosure is expected to spark a heated exchange between the Leader of Opposition, Pinarayi Vijayan, and Chief Minister V.D. Satheesan, as the Assembly is currently in session. The CAG report also drew attention to the increasing burden of off-budget borrowings, indicating liabilities have surged to Rs 39,230 crore.
Furthermore, the audit report emphasized Kerala’s heavy reliance on borrowings, with outstanding liabilities amounting to Rs 3,511 crore. It highlighted the Kerala Infrastructure Investment Fund Board (KIIFB) and the state pension company as significant sources of financial obligations for the state. The CAG findings expressed concerns about the state’s fiscal balance, noting that revenue growth has not matched expenditure.
Kerala witnessed a slight improvement in Gross State Domestic Product (GSDP) growth, rising from 9.30 per cent to 9.97 per cent, while revenue receipts saw only a marginal increase of 0.30 per cent. The report also pointed out a 42 per cent decline in Central assistance to the state, coupled with an 8.97 per cent rise in expenditure. The rising share of committed expenditure was highlighted as a major worry, with a significant portion of revenue being allocated to salaries and benefits, limiting funds for development projects.
The CAG’s observations are expected to fuel debates on Kerala’s borrowing practices, deficit handling, and long-term financial viability. The White Paper on the state’s finances and the budget proposed by Satheesan have hinted at a potential overhaul of KIIFB and forthcoming investigations into its operations over the past decade.
