Thiruvananthapuram, June 23 (IANS) A fresh political flashpoint is set to erupt in the Kerala Assembly with the CAG flagging 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 government.

The 2024-25 economic review report of the Comptroller and Auditor General, tabled on Tuesday in the Assembly, said the transfer was carried out in an irregular manner and had the effect of reducing the state’s revenue deficit and fiscal deficit figures.

The findings are likely to trigger a fresh war of words between the Leader of Opposition, Pinarayi Vijayan, who headed the previous government, and Chief Minister V.D. Satheesan, with the Assembly currently in session.

The CAG report also highlighted the mounting burden of off-budget borrowings, stating that such liabilities have reached Rs 39,230 crore.

It said Kerala continues to depend heavily on borrowings, with unsettled liabilities alone standing at Rs 3,511 crore.

The audit report pointed out that the Kerala Infrastructure Investment Fund Board (KIIFB) and the state pension company have emerged as major sources of financial obligations for the state.

The CAG findings raised concerns over the state’s fiscal balance, noting that revenue growth has not kept pace with expenditure.

Kerala’s Gross State Domestic Product (GSDP) growth improved from 9.30 per cent to 9.97 per cent, but revenue receipts registered only a marginal growth of 0.30 per cent.

The report noted that Central assistance to the state 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 utilised for 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.

Already in the White Paper on the state’s finances and the budget presented by Satheesan, it has been mentioned that KIIFB is all set to undergo a major overhaul and possible probes into the functioning in the past 10 years are to be announced.

–IANS

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