The Comptroller and Auditor General (CAG) audit report for 2024-25, presented in the Kerala Legislative Assembly on Tuesday, exposed severe financial mismanagement by the previous LDF government. The report notably pointed out the irregular diversion of Rs 262.06 crore from the Chief Minister’s Distress Relief Fund (CMDRF) and high off-budget liabilities tied to KIIFB and the state’s pension company.
The report flags a deepened fiscal crisis, underscoring systemic lapses in the state’s debt and budget management structures. It states that the government diverted Rs 262.06 crore from the Chief Minister’s Distress Relief Fund (CMDRF) into the state’s Consolidated Fund.
The CAG explicitly noted that this irregular transaction was carried out to artificially window-dress and lower the recorded revenue deficit and fiscal deficit of the state.
Off-budget borrowing vehicles, specifically the Kerala Infrastructure Investment Fund Board(KIIFB) and the Kerala Social Security Pension Limited (KSSPL), carry massive, undisclosed debt, the CAG says in its report. Because these bodies lack independent, sufficient revenue streams, the CAG reiterated that their massive repayment obligations ultimately fall as a direct liability on the state exchequer.
While the state’s Gross State Domestic Product (GSDP) increased by 9.97%, the growth in the state’s own revenue receipts remained practically flat at a mere 0.30%. The overall expenditure increased by 8.97%, CAG says in its report.
The report highlighted that salary, pension, and committed interest payouts swallow up 64.40% of the revenue expenditure and account for 80% of the total revenue receipts, leaving virtually no room for capital infrastructure spending. The financial squeeze worsened due to a steep 42% decline in financial assistance and grants from the Union government.
The CAG has also flagged the Kerala government for irregularly pulling funds out of Treasury Savings Bank (TSB) accounts. The government applied this questionable practice to divert money belonging to three state corporations- Rs.494.29 crore from the Kerala State Electricity Board, Rs.719.15 crore from the Kerala Water Authority, and Rs.551.94 crore from the Kerala State Civil Supplies Corporation.