The Comptroller and Auditor General (CAG) has found fault with the Kerala government’s practice of withdrawing funds parked in treasury savings bank (TSB) accounts – public contributions made to the Chief Minister’s Disaster Relief Fund (CMDRF) included – to the Consolidated Fund of the State.

In the case of the CMDRF, ₹262.06 crore parked in Special TSB (STSB) accounts were temporarily removed to the Consolidated Fund. The State government was also found to have withdrawn funds credited to the Kerala State Electricity Board (₹494.29 crore), the Kerala Water Authority (₹719.15 crore) and the Kerala State Civil Supplies Corporation (₹551.94 crore) in a similar manner.

The CAG report on State Finances for 2024-25 tabled in the Assembly on Tuesday described such resumptions of funds as “serious breach of accountability and financial propriety.”

In the case of the CMDRF, the CAG observed these were non-government funds created for providing financial aid to children with cancer and to victims of natural calamities, including the 2018 floods and the Wayanad landslides. These funds were raised as contributions from the public and government employees and their removal to the Consolidated Fund was “irregular.” Consequently, the resumption of CMDRF funds led to the understatement of the State’s revenue deficit and fiscal deficit by ₹262.06 crore during 2024-25, the CAG found.

Meanwhile, the State government had informed the CAG that the CMDRF funds were reallocated in the first week of the subsequent fiscal.

In the case of the KSEB, the State government had credited ₹494.29 crore as part of taking over 90% of the power utility’s loss for availing of additional borrowing space of 0.5% of the gross state domestic product (GSDP). As a result, the State was allowed to raise additional borrowing of ₹6,149 crore during 2024-25, through open-market borrowings. However, the State government later resumed the ₹494.29 crore, and adjusted it against the electricity duty payable by the KSEB to the government.

Similarly, ₹719.crore transferred to KWA for clearing water bill arrears of urban local bodies also was resumed. The CAG did not accept the government justification that the funds were resumed as the account was inoperative and the money was lying unutilised.

“Irregular resumption of funds from STSB accounts to the Consolidated Fund of State in violation of accounting principles and deliberate violation of Government of India guidelines after availing of additional borrowing space related to power sector reforms and irregular withdrawal of public money from CMDRF constituted serious breach of accountability and financial propriety,” the CAG report said.