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CAG flags Kerala’s off-budget borrowings to pay for welfare scheme

The CAG report on state finances — tabled before the Assembly on Friday — said if the state resorts to an off-budget route to finance its welfare schemes, the liabilities of the state may increase and lead to a debt trap.

Written by Shaju Philip | Thiruvananthapuram |
Updated: November 13, 2021 7:59:43 am
CAG, Kerala, Kerala government, kerala government budget, Kerala Social Security Pension, Kerala news, Indian express, indian express newsThe CAG's objection is related to off-budget borrowings made by Kerala Social Security Pension Limited to fund payments of social security pensions. (File)

The Comptroller and Auditor General (CAG) of India has taken strong exception to Kerala government’s practice of using off-budget borrowings to pay social security pensions, warning of a debt trap and saying that non disclosure of such liabilities raises questions of “transparency”.

The CAG’s report on state finances — tabled before the Kerala Assembly on Friday — said that if the state government resorts to an off-budget route to finance its welfare schemes, the liabilities of the state may increase and lead to a debt trap.

It also said that since these values are not visible on the state’s annual budget or financial accounts, the legislature is in the dark.

“Creating such liabilities, without disclosing them in the budget, raises questions both of transparency, and of inter-generational equity,’’ it said.

The CAG’s objection is related to off-budget borrowings made by Kerala Social Security Pension Limited (KSSPL) to fund payments of social security pensions. To meet the pension fund, the government floated KSSPL as a company in 2018.

It was envisaged that the funds are to be provided by the government through its budgets along with the funds received from the Centre under its national social assistance programme or any other welfare pension. The additional funds required for KSSPL are to be taken from other sources in the form of deposits, loan or other instruments from public sector undertakings.

“The audit observed that KSSPL had borrowed / raised funds amounting to ?13,662.47 crore from three State Government Companies ie Kerala State Beverages Corporation Limited (KSBCL), Kerala State Financial Enterprises Limited (KSFE) and Primary Co-operative Societies Consortium for Security Pensions (PCSCSP) up to 2019-20,” the CAG report said.

The CAG also argued that the government’s stand that liabilities of KSSPL, being a separate entity, are not the liabilities of the state is not tenable.

At present, pension of Rs 1,600 per month is paid under the scheme, for which 51 lakh beneficiaries are eligible.

According to government data presented in the Assembly last week, Rs 3,577 crore has been paid as welfare pension after the current government assumed office in May this year.

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