Telangana repaying debts from borrowed funds: CAG
Despite increasing revenues, the government opted for ways and means and overdraft to meet its expenses.
HYDERABAD: The State government is utilising borrowed funds to repay debts. Telangana, which had a revenue surplus up to 2018-19, has been reduced to a revenue deficit State. The government’s debts and committed expenditures are increasing every year.
The growth in capital expenditure has not kept pace with the steady growth of the Gross State Domestic Product (GSDP), according to the observations made by Comptroller and Auditor General (CAG) India.
However, the CAG has a word of appreciation for the State’s ‘prudential financial management’.
The CAG reports on ‘the Accounts at a gance’ and ‘Appropriation Accounts’ and ‘Finance Accounts’ for the year 2021-22 were tabled in the Assembly on Sunday. A total of Rs 63,561 crore, constituting around 50 per cent of the revenue receipts (Rs 1,27,468 crore) were spent on committed expenditures like salaries (Rs 30,375 crore), interest payments (Rs 19,161 crore) and pensions (Rs 14,025 crore). This is an increase of 15 per cent over the previous year, i.e., 2020-21.
“The extent to which the fiscal deficit, as represented by borrowed funds, has been channelised towards the creation of capital assets is an indicator of prudent financial management. The borrowings of Rs 46,995 crore in the year was partly utilised to meet the capital expenditure of Rs 28,883 crore and loans and advances of Rs 8,469 crore. Normally, public debt is discharged using revenue surplus. However, the government incurred a revenue deficit of Rs 9,335 crore for 2021-22. The borrowed funds were utilised for the repayment of public debt,” the CAG stated.
Despite increasing revenues, the government opted for ways and means and overdrafts to meet its expenses. During 2021-22, the State government availed a special drawing facility of Rs 9,636 crore for 289 days and ways and means advances of Rs 34,969 crore for 259 days. For the same period, an overdraft of Rs 22,669 crore was availed for 100 days.
Targets not met
Though a three per cent fiscal deficit was the target for 2021-22, it was Rs 46,639 crore, which was 4.06 per cent of the GSDP. The target for 2021-22 is that the outstanding debts should be less than 25 per cent of the GSDP. But, the outstanding debt was Rs 3,14,663 crore, which was 27.40 per cent of the GSDP in 2021-22. The total tax revenue increased by 37 per cent in the same year, the non-tax revenue increased by 45 per cent. But, the grants-in-aid decreased by 44 per cent in comparison to the previous year. The CAG while analysing the tax revenue trends, stated that the GST increased by 33 per cent in 2021-22 over 2020-21. Likewise, the taxes on property and capital transactions increased by 134 per cent and the total tax revenue increased by 39 per cent.
Capital expenditure is less
The CAG said that capital expenditure is essential if the growth process is to be sustained. Capital disbursements during 2021-22 amounted to Rs 28,874 crore (2.51 per cent of GSDP). The growth in capital expenditure has not kept pace with the steady growth of GSDP.
Housing took a back seat
There are significant variations in the Budget for 2021-22. Medical and Health, Panchayat Raj, Major and Medium Irrigation have expenditures in excess of the budget allocations. Whereas, Housing, Civil Supplies and Municipal Administration have substantial savings in budget estimates. For example, the budget allocated for Housing was Rs 7,222 crore in 2021-22, whereas the actual expenditure was just Rs 252 crore, a saving of 97 per cent.“The huge savings under Housing, Industries and Commerce indicate that schemes envisaged in the budget had been given less priority during implementation either due to the conservative approach of the government to attain the fiscal targets or the shortfall is purely due to inaccuracy in the Budget estimation process of the department,” the CAG noted.
No payments to pension scheme
The National Pension System (NPS) introduced on September 1, 2004, provides for employee contribution at 10 per cent of his/her monthly salary and is matched by the State government. The entire amount is transferred to the designated Fund Manager through the National Securities Depository Limited (NSDL)/Trustee Bank.
The Government transferred an amount of Rs 2,074.22 crore to NSDL/Trustee Bank during the year leaving a balance of Rs 313.72 crore as on March 31, 2022. However, the actual amount payable by the employees and the matching government contribution has not been estimated by the State government.
Further, though the State government is mandated to pay interest on the balance retained, no payment towards the same was made during the year, the CAG observed.
KCR on pensions
The old pension scheme became a ‘multi knotty” problem. The Congress assured to bring back the old pension scheme in Rajasthan, Chhattisgarh and other states. But, failed to do so. “We will examine the employees demand,” said Chief Minister K Chandrasekhar Rao in the State Legislative Assembly.