Thiruvananthapuram: A fresh political controversy is likely to emerge in the Kerala Assembly after the Comptroller and Auditor General (CAG) flagged the transfer of Rs 262.06 crore from the Chief Minister’s Distress Relief Fund (CMDRF) to the Consolidated Fund, raising questions over financial management during the previous Pinarayi Vijayan-led government.
The CAG’s 2024-25 economic review report, tabled in the Assembly on Tuesday, stated that the transfer was carried out in an irregular manner and had the effect of reducing Kerala’s revenue deficit and fiscal deficit figures.
The findings are expected to trigger a fresh political confrontation between the Leader of Opposition and the previous Chief Minister Pinarayi Vijayan, and Chief Minister V.D. Satheesan, with the Assembly currently in session.
The CAG report also highlighted the growing burden of off-budget borrowings, stating that such liabilities have reached Rs 39,230 crore.
It noted that Kerala continues to depend significantly on borrowings, with unsettled liabilities alone amounting to Rs 3,511 crore.
The audit report pointed out that the Kerala Infrastructure Investment Fund Board (KIIFB) and the state pension company have become major sources of financial obligations for the state.
The CAG raised concerns over Kerala’s fiscal position, observing that revenue growth has not matched the pace of expenditure.
The state’s Gross State Domestic Product (GSDP) growth improved from 9.30 per cent to 9.97 per cent, but revenue receipts recorded only a marginal growth of 0.30 per cent.
The report also stated that Central assistance to Kerala declined by 42 per cent, while expenditure increased by 8.97 per cent.
A major concern highlighted by the audit was the rising share of committed expenditure. Nearly 64.40 per cent of revenue expenditure and around 80 per cent of revenue receipts are being spent on salaries and other benefits, leaving limited fiscal space for development activities.
The CAG observations are expected to intensify the political debate over Kerala’s borrowing strategy, deficit management, and long-term financial sustainability.
The White Paper on the state’s finances and the budget presented by Satheesan had already mentioned that KIIFB is set to undergo a major overhaul, with possible probes into its functioning over the past 10 years expected to be announced.
With IANS inputs