The latest audit report from the Comptroller and Auditor General (CAG) criticizes the state government for its off-budget borrowings.
The Kerala state assembly received a report Thursday revealing a significant surge in off-budget borrowings, intensifying tensions between the state government and the Comptroller and Auditor General (CAG
Finance Minister K.N. Balagopal addressed the issue, stating that previous findings by the CAG had been dismissed by both the Public Accounts Committee and the State Assembly.
The report highlighted the state's reliance on off-budget borrowings, particularly through entities like the Kerala Infrastructure Fund Board (KIIFB) and the Kerala Social Security Pension Ltd (KSSPL), along with resorting to short-term borrowings to settle pending contractor bills via the bill discounting system.
This observation echoes similar concerns raised by the Principal Accountant General, S. Sunil Raj, in the audit report for the year 2019, which had previously been disregarded by the assembly.
The reappointment of S. Sunil Raj as the Principal Accountant General has reignited the standoff between the state government and the CAG. Raj, who previously served as the Director General in the office of CAG in New Delhi, has brought renewed focus on fiscal accountability.
According to the report, the state's overall debt, inclusive of off-budget borrowings, stands at Rs. 3,83,267.15 crore. Excluding the GST compensation of Rs. 14,505.31 crore received as a back-to-back loan, the effective total liabilities amount to Rs. 3,68,761.84 crore.
The report cautions that continued borrowing could lead to a dangerous accumulation of debt, resulting in increased interest payments for the government.
The Kerala Infrastructure Fund Board (KIIFB) has reportedly taken a loan of Rs. 7762.78 crores, while the Kerala Social Security Pension Ltd (KSSPL) borrowed Rs. 6550 crores, with outstanding debts amounting to Rs. 11,206.49 crores till March 2022.
Highlighting the non-disclosure of off-budget borrowings in the state budget, the CAG report indicates that government liabilities were understated by Rs. 25,874.39 crores, raising concerns about transparency and accountability in fiscal management.
The report also highlights inefficiencies in the state's tax collection, with revenue receipts increasing by only 25.57 percent during the period under review. The state's share in revenue receipts dwindled from 55.96 percent in 2017-18 to 50.02 percent in 2021-22, signaling poor tax collection efforts, especially amid the pandemic.
The report's findings emphasize the urgent need for the state government to address fiscal challenges, enhance transparency in budgetary practices, and strengthen tax collection mechanisms to ensure sustainable financial health and mitigate the risk of a looming debt
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