HYDERABAD: The Comptroller and Auditor General (CAG) recommended that the state government tread a reform path to end indirect borrowings within a set timeframe, as recommended by the Fifteenth Finance Commission.
The CAG also recommended the government to fully disclose its off-budget borrowings (OBB) taken through Special Purpose Vehicles/Public Sector Undertakings/Autonomous Bodies for implementation of government schemes/programmes/works in the interest of transparency.
In its report ‘State Finances Audit Report’ for the year ending March 2022, which was tabled in the Legislative Assembly on Thursday, the CAG said that in 2021-22, capital expenditure accounted for only 74% of market borrowings and 62% of the fiscal deficit. Further, 79% of the fiscal deficit was financed through market borrowings.
“Ideally, market borrowing should be utilised for the creation of capital assets as capital expenditure. Up to 2018-19, the market borrowings were lesser than capital expenditure indicating that market borrowings could have been fully utilised for the creation of capital assets. However, during the past three years, we noticed that market borrowings were much higher than the capital expenditure indicating that they were utilised for financing fiscal deficit,” the CAG report said.
It said that the state government had a total OBB of Rs 1,18,955 crore at the end of March 2022 in respect of 12 PSUs and four autonomous bodies (ABs). However, the Telangana government did not specifically disclose the OBB in its budget documents for 2021-22.
The total outstanding debt of the state government at the end of March 2022 was Rs 3,21,612 crore. The outstanding liabilities grew by 14% over the previous year and it has nearly doubled in the last five years — the end of March 2022.
Repayment of debts
The maturity profile of outstanding stock of public debt as of March 31, 2022, showed that 46% (Rs 1,05,242 crore) of the total outstanding public debt was to be repaid in the next seven years. Of the Rs 45,716 crore market borrowings taken during 2021-22, the repayment schedule of Rs 29,716 crore will continue till 2032-2041. As much as 65% of loans taken during the year have short to medium-range maturity periods. In contrast, 59% of loans taken in the previous year had longer maturity periods. The interest on the borrowings during the year ranged from 6.89% to 7.37%.
CAG’s findings on budgetary management
Dalit Bandhu not implemented
The state launched a major policy viz., CM Dalit Empowerment Programme (or Telangana Dalit Bandhu) with an original Budget provision of Rs 1,000 crore. An expenditure of Rs 4,442 crore was booked as per Appropriation Accounts. However, the audit found that the actual expenditure was only Rs 2,101 crore as of March 2022. Amounts of Rs 1,335 crore and Rs 223 crore were lying in the deposit account and bank account of Telangana Scheduled Caste Cooperative Development Corporation Limited and Rs 783 crore were with district administrators. Despite the availability of funds, of the 38,511 applications received, only 21,339 were sanctioned as of March 2022
Amounts unspent
Huge amounts remained unspent in the scheme for debt relief to farmers (Rs 4,462 crore), construction of two-bedroom houses (2BHK) for the rural poor (Rs 4,270 crore), construction of 2BHK houses for the urban poor (Rs 4,035 crore) and special development fund for welfare and development activities (Rs 3,898 crore). Expenditure on maintenance of irrigation projects continued to be low persistently
