Bureaucratic Oversight: Kerala’s Revenue Loss Over Decades-Old Forest Land Lease

The Comptroller and Auditor General has flagged a significant shortfall in forest land licence fees owed to Kerala by its neighbour, Tamil Nadu.

For nearly four decades, a crucial administrative loose end has remained knotted in the lush landscapes of the Western Ghats. The Parambikulam-Aliyar Project (PAP), a landmark endeavour in water resource sharing between Kerala and Tamil Nadu, is now at the centre of a fiscal audit that highlights a staggering lack of administrative diligence. According to the latest Comptroller and Auditor General (CAG) report, the Kerala Forest Department has failed to revise the licence fee on over 2,400 hectares of forest land leased to Tamil Nadu, resulting in a revenue gap that has quietly ballooned since 1998.

The Cost of Inaction

The arithmetic of this oversight is stark. While the original 30-year lease agreement for the PAP concluded in November 1988, no fresh contract was ever executed. Consequently, the fee remained frozen at the 1998 rate of ₹100 per hectare. Over the last twelve years alone—from 2012-13 to 2023-24—this stagnation has cost the Kerala exchequer ₹1.14 crore in unpaid fees. When factoring in a 12% annual interest liability, that figure climbs by another ₹56 lakh, representing a significant cumulative loss for a state forestry department that often operates under severe budgetary constraints.

The discrepancy exists because, despite three subsequent revisions to land tax rates within Kerala, the Forest Department neglected to adjust the lease terms for the 2,455.23 hectares currently under Tamil Nadu’s usage. Current rates should have reflected the shifts from ₹200 per hectare in 2012 to ₹500 in 2014, and finally to ₹800 per hectare as of April 2022.

Why it Matters: The Pattern of Institutional Inertia

This report serves as a diagnostic of a wider malaise in inter-state administrative housekeeping. When government departments treat decades-old lease agreements as "set-and-forget" arrangements, they create fiscal vacuums that grow harder to fill with each passing year. For the public, this isn't just about the ₹1.7 crore in lost revenue; it highlights a lack of accountability in managing state assets.

The CAG’s intervention is a necessary nudge to formalise these long-expired agreements. If the Kerala government is to maintain its fiscal health, it must move beyond simply issuing notices and ensure that administrative renewals become a rhythmic, rather than exceptional, part of state operations. Without a systematic mechanism to trigger fee revisions alongside state tax updates, similar shortfalls in other inter-state projects remain a distinct possibility.

A Path to Recovery

The government has responded to the CAG’s findings by confirming that a formal notice has been dispatched to Tamil Nadu, demanding the settlement of all outstanding arrears along with the accrued interest. Whether this initiates a long-overdue renegotiation of the lease terms or remains a one-off demand for payment is yet to be seen. For now, the spotlight remains on the Forest Department’s ability to monitor its own land holdings and ensure that the legacy of the Parambikulam-Aliyar Project is governed by current fiscal reality rather than the inertia of the 1990s.