Kerala finances marked by ‘increasing trend of liabilities,’ says CAG report

The Comptroller and Auditor General of India (CAG) has observed that the trends connected wide liabilities amusement that Kerala’s finances are “heavily stressed,” adjacent arsenic it noted that the Gross State Domestic Product (GSDP) grew by 11.97% successful 2023-24 implicit the erstwhile fiscal.

The CAG’s 2023-24 study connected Kerala finances, tabled successful the Kerala Legislative Assembly connected Thursday, stated that the full liabilities of the State, including ‘off-Budget’ borrowings, roseate from ₹4 lakh crore successful 2022-23 to a small implicit ₹4.33 lakh crore successful 2023-24, adjacent arsenic the debt-to-Gross State Domestic Product ratio showed a dip from from 39.08% to 37.84%. The CAG noted that were it not for the off-Budget borrowings by the Kerala Infrastructure Investment Fund Board (KIIFB) and the Kerala Social Security Pension Ltd. (KSSPL), the liabilities-GSDP ratio would person stood astatine 34.96%.

As successful the erstwhile reports, the latest CAG study besides has frowned upon the off-Budget borrowings by the KIIFB and the KSSPL, saying that they person “led to an further load connected the State exchequer.” According to the report, the Kerala authorities raised ₹10,632.46 crore successful 2023-24 arsenic off-Budget borrowings, “which did not travel into the Consolidated Fund of the State but are required to beryllium repaid and serviced done the Budget.”

The GSDP grew by 11.97% successful 2023-24 implicit the erstwhile fiscal. Industry grew by 8.85%, the work assemblage by 14.18% and agriculture by 5.61%.

Debt repayment

Presenting a year-wise repayment docket of the nationalist indebtedness outstanding, the CAG study states that Kerala, connected an average, volition person to repay nationalist debt, including interest, of ₹28,572 crore annually till 2033-34.

It noted that the State would person to edifice to further borrowings each twelvemonth to screen the assets gap, which would effect successful summation successful indebtedness and much funds being utilised for repayment of borrowings. Overall liabilities, including off-Budget borrowings, person grown, connected an average, astatine 11.61% annually betwixt 2019-20 and 2023-24, the study said. It further observed that the State finances are “marked by (an) expanding inclination of liabilities (debt, off-Budget borrowings and truthful on) which airs hazard to the people of indebtedness stabilisation and indebtedness sustainability.”

On the affirmative side, the CAG’s projections besides constituent to an encouragingly decreasing inclination successful repayment implicit the 10-year period.

State govt.’s dissent

Observations by Finance Minister K.N. Balagopal, which excessively was tabled successful the House on with the CAG report, reiterated the authorities basal that the CAG’s findings connected off-Budget borrowings were already rejected by the Public Accounts Committee (PAC). “As was made wide during the discussions successful the Assembly connected the State Finance Audit Report for 2019, the borrowings of the KIIFB are connected the ground of authorities guarantees and are truthful not nonstop liabilities of the State but lone contingent liabilities peculiarly since the KIIFB funds remunerative projects and generates income,” Mr. Balagopal’s enactment said.

The KSSPL borrowings were meant for managing the liquidity of the State and for ensuring timely outgo of payment pensions to implicit 60 lakh beneficiaries. The CAG study loses show of this fact, Mr. Balagopal said.