HYDERABAD: The State government’s fiscal deficit crossed the limit of 3.5 per cent of the Gross State Domestic Product (GSDP) marginally in 2017-18 financial year, according to the Comptroller and Auditor General (CAG) report on the State Finances for the year 2017-18, which was tabled in the State Assembly on Sunday. The fiscal deficit of the State in 2017-18 was Rs 26,700 crore. It decreased by Rs 8,581 crore when compared to the preceding year of Rs 35,281 crore.
“Fiscal deficit as a percentage of GSDP was 3.55 per cent and marginally exceeded the ceiling of 3.5 per cent fixed by the 14th Finance Commission,” the CAG report stated.However, the CAG observed that the fiscal deficit position improved over the previous year mainly due to reduced capital expenditure by Rs 9,469 crore.
The primary deficit in 2017-18 was Rs 15,864 crore. It was decreased by 41 per cent in comparison to the preceding year of Rs 26,672 crore. “Though primary deficit decreased, it was evident that the non-debt receipts of Rs 88,962 crore were not sufficient to meet primary expenditure of Rs 1,04,826 crore,” the CAG observed.
As per the 14th Finance Commission recommendations, the outstanding debt to GSDP ratio was to be less than 22.82 per cent for the year 2017-18. The debt-GSDP ratio (19 per cent), though increasing over the years, was within the ceiling prescribed by the 14th Finance Commission.
As per the medium-term fiscal policy statement of the State government, the total outstanding liabilities were to be less than 25 per cent of the GSDP. In 2017-18, the total outstanding liabilities of Telangana were 22.05 per cent of the GSDP, which is within the prescribed limit. The outstanding liabilities grew by 23 per cent over the previous year, the report said.The CAG suggested the State government should rationalise the Budget preparation exercise so that the gap between the budget estimates and actuals is bridged.
Efficiency In Tax Collection
The CAG patted the government for efficiency in tax collections. “The cost of collection of major taxes of the State decreased during the last three years leading to greater efficiency (measured as cost of collection of tax as a percentage of the tax collection),” the CAG observed.The gross revenue collection (taxes on sales, trade and SGST) in 2015-16 was Rs 29,846 crore and the cost of collection is Rs 210 crore. The percentage to the gross collection is 0.71. In 2016-17, the gross revenue collection was Rs 34,235 and the cost of collection is Rs 228 crore. The percentage to gross collection is 0.67. In 2017-18, the gross revenue collection was Rs 40,068 crore and the cost of collection is Rs 217 crore. The percentage to gross collection is 0.54.
Risk Assessment
The CAG also observed that the outstanding debt increased by 18 pc over the preceding year, at a higher rate than the growth of the GSDP. The State government had extended guarantees to loans, which were categorised as 100 pc risk, taken by bodies whose accounts were pending finalisation indicating absence of any risk assessment, it said.