THIRUVANANTHAPURAM: The state’s revenue registered a 13.79% increase in 2022-23 compared to the previous fiscal, while its revenue expenditure decreased by 2.89%, helping the state reduce its revenue deficit and fiscal deficit by over Rs 20,000 crore each in 2022-23, according to a report of the Comptroller & Auditor General (CAG) on state finances for the year ended March 31, 2023.
While the state’s share of Union taxes and duties increased by 2.47%, the grants-in-aid from the Union government fell by 8.79%, the report said. The state received compensation of Rs 7,245.97 crore as grants under revenue receipts on account of loss of revenue arising out of the implementation of GST during 2022-23.
The CAG report pointed out that the state government did not make any disclosure on the off-budget borrowings of Rs 17,742.68 crore through KIIFB and Rs 11,733.29 crore through Kerala Social Security Pension Ltd. (KSSPL). This led to an understatement of government liabilities by Rs 29,475.97 crore.
“Taking into account the off-budget borrowings of the state, the liability / GSDP ratio stands at 38.23%,” the CAG report said. Though the target set in Kerala Fiscal Responsibility Act over the years was to eliminate revenue deficit completely and to achieve revenue surplus during 2017-18 to 2022-23, the state continued to be revenue deficit during the period. However, the state had been able to contain the fiscal deficit to GSDP ratio within 4%.
The report noted that as of March 31, 2023, the state government had an accumulation of liabilities of Rs 3.88 lakh crore for its activities against which, only Rs 1.21 lakh crore (31.35% ) was used for capital creation. The state had utilised Rs 2.30 lakh crore (59.46% for meeting its cumulative revenue deficit.
“In each financial year, more than 50% of additional liabilities were being created to meet its revenue expenditure. The same pattern was repeated in 2022-23, wherein 59.46% of the additional liabilities created was for meeting the revenue deficit of the state,” the report said.
CAG findings on KIIFB & KSSPL
During the year 2022-23, KIIFB raised off-budget loans amounting to Rs 5,109.24 crore from various sources, the report said. The government replied to CAG that KIIFB’s borrowings are neither on budget or in the nature of off-budget borrowings but are done by KIIFB as part of its agency function to build infrastructure projects. It was also stated that there was no liability / contingency associated with KIIFB’s borrowing liabilities on the state government.
“The contention of the government is not acceptable, as KIIFB has no revenue of its own and the state government has to defray the debt obligations of KIIFB by transferring its own revenue through budget every year which otherwise could have been used for financing the deficits of the state,” the report said.
On KSSPL, the CAG noted that it had an outstanding loan amount of Rs 11,733.29 crore as of March 31, 2023 “Since KSSPL is a government company having no revenue of its own, the outstanding loan is also an additional liability of the government,” the report said. The CAG report pointed out that the combined liabilities of KIIFB and KSSPL raised the outstanding liability - GSDP ratio of the state from 35.42% to 38.23% which was way above the fiscal target of 34.50%.
CAG REPORT ON STATE FINANCES (2022-23)
Decrease in revenue deficit: L20,312.99 crore (68.77%)
Decrease in fiscal deficit: L20,491.24 crore (44.50%)
Accumulated liabilities as of March 31, 2023: L3,88,082.36 crore
Amount used for capital creation: L1,21,670.54 cr (31.35%)
Amount used for meeting cumulative revenue deficit: L2,30,766.85 crore (59.46%)
Outstanding liability to GSDP ratio of the state: 38.23%