Thiruvananthapuram: The committee that prepared Kerala's fiscal status report has recommended merging the Kerala State Beverages (Manufacturing and Marketing) Corporation (Bevco) and the Kerala Civil Supplies Corporation (Supplyco) as part of measures to improve the state's fiscal efficiency.

The recommendation is contained in the fiscal status report tabled in the Assembly by Chief Minister V D Satheesan on Thursday. The report was prepared by a committee headed by former Cabinet Secretary Dr K M Chandrasekhar.

According to the report, Bevco has been paying substantial amounts in taxes on its profits in recent years. The corporation paid ₹48.41 crore in taxes during 2022-23, ₹84.66 crore in 2023-24 and ₹47.33 crore in 2024-25.

In contrast, Supplyco continues to incur significant annual losses due to its subsidised sale of essential commodities. The report also notes that the new government has inherited accumulated payment arrears of ₹2,893 crore payable to Supplyco as of March 31, 2026, adding to the fiscal burden.

To address this imbalance, the committee has proposed combining the two state-owned entities into a single corporation with separate divisions for liquor distribution and civil supplies operations.

The report argues that such an institutional restructuring would allow the government to offset the losses of the civil supplies division against the profits generated by the beverages division. This, in turn, would reduce the tax liability currently borne by Bevco and help lower the subsidy burden on the state government.

The committee said the proposed merger could improve overall fiscal efficiency without affecting the functional objectives of either organisation.

The recommendation forms part of a broader set of proposals contained in the fiscal status report, which assesses Kerala's financial position and outlines measures to address the state's mounting fiscal challenges.