The Comptroller and Auditor General of India (CAG) has expressed concern over the increasing liabilities of the State year on year claiming that about 97 per cent of the fiscal deficit was financed through market borrowings during the financial year 2019-20.
The CAG said the State could not achieve revenue surplus during 2019-20 for the first time in five years though other key fiscal targets prescribed by the State Fiscal Responsibility and Budget Management Act relating to fiscal deficit and ratio of total outstanding debt to GSDP were achieved. Although the outstanding liabilities were within the targets of the revised TSFRBM Act, these could be way above the targets if the liabilities of the government with regard to its off budget borrowings were taken into account.
The State Government had liability for off budget borrowings of ₹71,131.63 crore to the end of March 2020 (₹ 16,077.04 crore during 2019-20) taken by various entities on its behalf which it had not disclosed appropriately as part of its budget documents. “This has the impact of diluting public financial management and oversight role of the legislature and placing major sources of funding of government’s crucial socio-economic projects beyond the control of the legislature,” the CAG observed.
“Over 75 per cent of the borrowings during the year 2019-20 were utilised to repay debt pertaining to earlier years, affecting asset creation in the State,” the CAG said in its report. Interestingly, the government had not circulated the copies of the CAG reports to the media like the previous years and had just released a three page press brief.
Outstanding public debt at the end of the year had increased by 18.04 per cent over the preceding year. In fact, growth rate was higher than that of the GSDP which grew at 12.61 per cent. Nearly half of the total outstanding public debt (46 per cent) was to be repaid over the next seven years indicating the need for the State to augment its resources to meet the repayment burden.
The CAG said revenue receipts of the Stater marginally increased by ₹ 1,124 crore (1.11 per cent) while revenue expenditure increased by ₹11,715 crore (12.07 per cent). Committed expenditure on interest payments increased by ₹ 1,800 crore (14.30 per cent) over the previous year. At 14.3 per cent, interest payments relative to revenue receipts were higher than the target of 8.39 per cent fixed by the XIV Finance Commission.
The CAG had also expressed concern that the State continued to spend less on education and health as a proportion of its aggregate expenditure vis-a-vis the other general category States. The State Government did not bestow required attention to asset creation and capital expenditure dipped in comparison to the preceding year. Huge capital was blocked due to delays in completing the irrigation projects.
The CAG observed that the State Government had not discharged its commitment of Rs. 4,063.65 crore for taking over losses of Distribution Companies under the UDAY scheme as of March 2020 as agreed in the tripartite agreement with Government of India and Discoms. The current commitments stands postponed to future years besides non-achievement of objective of financial turn around of Discoms as envisaged under the UDAY scheme.
