The Comptroller and Auditor General of India has expressed concern over the off-budget borrowings (OBBs) of the State Government claiming that the percentage of the outstanding liabilities would be way above the limit if these were considered.
In its State Finances Audit Report for the year ended March 31, 2021, the CAG said although the percentage of total outstanding liabilities to GSDP at 28.11 per cent was within the limit of 29.5 per cent prescribed by the XV Finance Commission for 202-21, this would be way above the limit at 38.1 per cent if the OBBs of ₹97,940.45 crore were considered. Non-disclosure of OBB had a dual impact of diluting public financial management and legislative oversight and was in contravention of the recommendations of the XV Finance Commission.
The CAG said the government resorted to longer maturity borrowings as 58.98 per cent of its market borrowings during the year were with a maturity of 20 to 30 years. There was however no evidence on record to show that the government made any financial impact study for long maturity borrowings with similar interest rates. The State Government, the CAG said, was not fully disclosing all the guarantees given by it to various institutions.
The Government also did not ensure financial performance and accountability of institutions before providing guarantees. As the State registered revenue deficit, market borrowings had to be used to finance revenue deficit and fiscal deficit. Utilisation of ways and means advances had increased significantly in the year 2020-21 due to COVID-19 pandemic.
On the impact of COVID-19 pandemic, the CAG said economic slowdown coupled with the pandemic had the twin effect of decrease in revenue receipts and increase in revenue expenditure particularly in the initial months of the financial year as compared to previous year. The State had to depend significantly on ways and means advances.
The State registered the lowest growth rate in the last five years during 2020-21 in view of the COVID-19 pandemic. As a result, the State was not able to achieve any of the three key fiscal targets – maintenance of revenue surplus, targets of fiscal deficit to GSDP and total outstanding liabilities to GSDP- for the year.
However, it was heartening to note that Telangana could register a positive growth rate of 2.42 per cent during the year as compared with a negative growth rate of 2.97 per cent at the national level.
The CAG also pointed to the consistent trend of incurring expenditure without budget provision (₹1,247 crore) as also expenditure over the above the provision (₹81,154.54 crore) across the years in contravention of the constitutional provisions. “Such excess expenditure of ₹1.32 lakh crore from 2014-15 to 2019-20 was yet to be regularised,” the CAG said.
