CAG flags previous government over Rs 262 crore transfer from relief fund to treasury

THIRUVANANTHAPURAM: The CAG has found that the previous LDF government, which was struggling under a financial crisis, also used the Chief Minister’s Distress Relief Fund (CMDRF) for other purposes. According to the report, Rs 262 crore was diverted and transferred to a treasury account used for general government expenses. The finding was included in the audit report for the financial year 2024-25, which was presented in the Assembly on Tuesday.

The CMDRF is meant to provide relief to people affected by natural disasters. It is funded by contributions from the public and government employees. The report says that this fund cannot be used for other purposes and that diverting it is an irregular and serious violation of financial rules and accountability.

However, the previous government told the CAG that the transfer was a technical adjustment to reduce the fiscal deficit and revenue deficit. It also said the amount was later returned to the relief fund. The CAG did not accept this explanation.

The CAG also mentioned that Rs 494.29 crore meant to cover the losses of KSEB (Kerala State Electricity Board), Rs 719 crore for clearing the dues of the Water Authority, and Rs 551.94 crore for paying the paddy procurement price to the Civil Supplies Corporation were also diverted. It is also noted that the severe financial crisis in the state led to this diversion of funds.

Rising debt and financial stress
1. The CAG said that the financial crisis has worsened because the state’s debt is increasing at a faster rate than its revenue. Additional liabilities created by KIIFB and the Social Security Fund, lower-than-expected funds from the Centre, and the inability to control expenditure have also contributed to the crisis.
2. The state’s economic growth stands at 9.97%, while its debt is rising at 11.34%. The government’s own revenue growth is less than one per cent, at just 0.31%. Currently, the state’s total output is Rs 12.48 lakh crore, while its debt has reached Rs 4.90 lakh crore.

Uncollected taxes- Rs 41,188.44 crore

• Total expenditure exceeds revenue by Rs 48,248.14 crore
• Nearly 80% of revenue is spent on salaries, pensions, interest payments, and subsidies
• Uncollected taxes amount to Rs 41,188.44 crore
• Unpaid dividend from public sector units is Rs 153.64 crore
• 236 incomplete projects worth Rs 2.04 lakh crore remain stalled