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Govt. extended guarantees to bodies that had not finalised their accounts: CAG
The Comptroller and Auditor General (CAG) of India has noted that the outstanding public debt of Telangana to the tune of ₹ 1.65 lakh crore increased by 16% in 2018-19 over the preceding year at a slightly higher pace than growth of Gross State Domestic Product (GSDP).
Interest payments increasingly consumed revenue receipts and were much higher at 12.41 per cent against the target of 8.37% fixed by XIV Finance Commission.
The CAG report for 2018-19 was tabled in the Assembly on Friday. It said the revenue surplus was overstated by the State government in its budget reports by ₹9,481.97 crore and fiscal deficit by ₹ 217.86 crore on account of misclassifications and non-contribution to statutory funds. Effectively, there was a revenue deficit of ₹ 5,144.97 crore and fiscal deficit of ₹ 27,166.86 crore.
In a series of recommendations, the CAG asked the State government to rationalise budget preparation exercise so that the gap between budget estimates and actuals was minimised. This was because there was an increase in revenue receipts and revenue expenditure but found to be lower than the budget estimates.
The State government was also asked to place on record debt servicing capacity of institutions before providing them loans because the average rate of interest payments as a percentage of outstanding liabilities was 6.39 per cent while the interest receipts as a percentage of outstanding lands and advances was only 0.03%. As of March 31, 2019, loans and advances given by government to autonomous bodies, corporations etc were ₹ 24,509 crore.
The government provided loans of ₹ 5,932 crore to Hyderabad Metro Water Supply and Sewerage Board whose annual accounts were in arrears from 2010-11. Government also gave fresh loans of ₹ 1,083 crore to three autonomous bodies for servicing their past loans.
It was noted that the government extended guarantees to bodies that had not finalised their accounts. Out of total loans guaranteed by government, nearly 65% related to two special purpose vehicles — Telangana Drinking Water Supply Corporation for implementation of Mission Bhagiratha and Kaleswaram Irrigation Project Corporation Limited for Kaleswaram project.
The CAG asked the government to ensure that no expenditure was incurred without budget provision or in excess of what was passed by the legislature. By incurring an excess expenditure of ₹ 29,133 crore in seven grants and two appropriations, the government violated constitutional provision which provided that no money shall be withdrawn from the Consolidated Fund except under appropriation by law by the legislature.
Another provision which made it mandatory for the government to get excess expenditure over a grant or appropriation regularised by legislature was also not heeded in an excess expenditure of ₹55,517 crore over and above the allocation during the years 2014-15 to 2017-18.
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