THIRUVANANTHAPURAM: The Kerala government appears to have taken a firm step towards making its Public Sector Undertakings (PSUs) more accountable.
After years of passive reminders and delayed audits, the Kerala government is finally drawing a line. Kerala Finance Minister KN Balagopal has been working hard to bring in discipline in the running of public sector undertakings and public finance.
In a stern new directive, the Finance Department has warned that future grants and funding access will be blocked for state-run Public Sector Undertakings (PSUs) and autonomous bodies that fail to bring their accounts up to date.
The circular, issued by Additional Chief Secretary KR Jyothilal, makes it clear that non-compliance with audit and accounting rules will now carry fiscal consequences. Departments have been instructed to ensure that the entities under their control clear at least 50 per cent of their pending audit paras and annual accounts by September 30, 2025, or face denial of further government support.
Strongest action
This is the strongest action yet from the state government against the chronic audit delays that have plagued its public sector for years. Despite legal requirements to submit accounts annually for audit by the Comptroller and Auditor General (C&AG), compliance remains abysmally low.
The latest data underscores the problem. According to the State Finance Audit Report (March 2023), 24 autonomous bodies had a backlog of 79 audit-pending accounts, some overdue by as much as 10 years.
Meanwhile, the C&AG’s report on PSUs (presented in March 2025) showed that only 16 out of 131 working PSUs had submitted their FY 2022–23 accounts – a compliance rate of just 12.21 per cent. A staggering 270 accounts were still pending from 115 PSUs.
But unlike in the past, the government now appears ready to act. In addition to blocking grants, the Finance Department has warned that Finance Officers of defaulting entities will be held personally accountable for lapses – a move that signals administrative consequences beyond financial penalties.
A senior official familiar with the directive said, “We are not just issuing another circular – this is a compliance deadline. If these bodies do not fall in line, they will not get funding.”
The circular marks a shift in tone from persuasion to enforcement, as the state grapples with growing fiscal strain and mounting debt. With transparency and accountability under increasing scrutiny, the message is clear: public funds will no longer flow unchecked to institutions that ignore audit rules.
Whether the threat of financial chokeholds will finally bring Kerala’s defaulters into line remains to be seen – but this time, the government seems intent on following through.
