CAG Slams Kerala Government for 'Irregular' Withdrawals from Public Funds Including Disaster Relief
The Comptroller and Auditor General (CAG) has criticised the Kerala government for what it termed 'irregular' withdrawals of funds parked in treasury savings bank (TSB) accounts, including public contributions to the Chief Minister's Disaster Relief Fund (CMDRF). The CAG's report on State Finances for 2024-25, tabled in the Assembly on Tuesday, described these actions as a 'serious breach of accountability and financial propriety.'
According to the report, the State government, then led by the Left Democratic Front (LDF), transferred ₹262.06 crore from the CMDRF's Special TSB (STSB) accounts to the Consolidated Fund of the State. The CMDRF comprises non-government funds raised from the public and government employees for providing aid to children with cancer and victims of natural calamities, including the 2018 floods and the Wayanad landslides. The CAG termed the removal of these funds 'irregular,' noting that it led to an understatement of the State's revenue deficit and fiscal deficit by ₹262.06 crore during 2024-25.
The report also flagged similar withdrawals from other entities. The government withdrew ₹494.29 crore from the Kerala State Electricity Board (KSEB) after initially crediting that amount as part of taking over 90% of the power utility's loss. This allowed the State to avail additional borrowing space of 0.5% of the gross state domestic product (GSDP), enabling extra open-market borrowings of ₹6,149 crore in 2024-25. However, the government later resumed the ₹494.29 crore, adjusting it against electricity duty payable by KSEB.
Similarly, ₹719.15 crore transferred to the Kerala Water Authority (KWA) for clearing water bill arrears of urban local bodies was also resumed. The government argued that the funds were unutilised and the account was inoperative, but the CAG did not accept this justification.
Additionally, ₹551.94 crore was withdrawn from the Kerala State Civil Supplies Corporation in a similar manner.
The CAG report concluded that these actions violated accounting principles and deliberately breached Government of India guidelines after availing of additional borrowing space related to power sector reforms. The government informed the CAG that the CMDRF funds were reallocated in the first week of the subsequent fiscal year.
