THIRUVANANTHAPURAM: In a move that has left financial observers puzzled, the Kerala Government credited Rs494.29 crore to Kerala State Electricity Board (KSEB) as financial assistance – and then quietly withdrew the same amount just before the close of the financial year.

The assistance, sanctioned through Government Order (Rt) No. 245/2024/POWER dated December 26, 2024, was meant to compensate the state-run power utility for losses incurred under power sector reforms in FY2023–24.

The amount was duly allocated to the Treasury account maintained in the name of KSEB’s Financial Adviser.

However, on March 30, 2025, the government resumed the entire amount, effectively nullifying the aid to KSEB.

The unusual back-and-forth has raised a string of questions – why sanction the assistance if it was to be taken back? Was this a mere book entry to project timely support to KSEB, or part of a year-end fiscal adjustment to stay within borrowing limits?

No official explanation has been offered yet, but finance watchers see the move as a possible sign of the state’s worsening cash position. Kerala has been grappling with a mounting revenue deficit and shrinking headroom to borrow from the market, prompting speculation that the reversal was a desperate measure to keep its fiscal deficit within permissible limits.

“Such a reversal is not a technicality – once an amount is credited, withdrawing it means the government either ran short of cash or needed to adjust its books to meet fiscal targets,” said a senior chartered accountant familiar with state public accounts.

KSEB, meanwhile, continued to recognise the Rs494 crore as income under exceptional items in its consolidated accounts and as a receivable asset — a move that led auditors to flag a profit overstatement of the same amount.

Adverse opinion

While that prompted an adverse opinion on KSEB’s books, the deeper story lies in the government’s own fiscal conduct — extending assistance on paper and retracting it days before year-end.

Observers say the episode highlights not just KSEB’s financial distress but also the state’s fragile fiscal management, where even sanctioned support may not translate into actual cash flow.

“If the government genuinely lacked funds, the transparency question remains – why sanction it at all? And if the sanction was purely notional, it raises uncomfortable questions about the authenticity of fiscal disclosures,” said a former finance department official.

As the numbers stand, the Rs494 crore that appeared briefly in KSEB’s books has become a symbol of a deeper unease – a government juggling financial optics and liquidity stress at the same time.