CAG raps state govt for use of borrowed funds for meeting current consumption and repayment of interest on outstanding debt

The Comptroller & Auditor General (CAG) in its scathing observation said that the Maharashtra government should ideally use borrowed funds to fund capital creation and developmental activities. ‘’Using borrowed funds for meeting current consumption and repayment of interest on outstanding loans is not sustainable,’’ it added.

The CAG report for 2019-20, which was tabled by the Deputy Chief Minister Ajit Pawar in the state assembly, said during 2015-16 and 2016-17, nearly 13% of the borrowings were utilized for incurring revenue expenditure, whereas in 2017-18 and 2018-19, in addition to the borrowings the revenue surplus could be utilized for incurring capital expenditure. During 2019-20, the borrowings were not sufficient to meet the capital expenditure.

Further, CAG pointed out that the revenue gap, which was negative during 2016-17, turned positive during 2017-18 and 2018-19 indicating the increasing capacity of the state to sustain the debt in medium to long run. However, during 2019-20 (the last year of the BJP rule and assumption of power by Maha Vikas Aghadi government after November 2019), the resource gap turned negative leading to risk of unsustainable debt.

According to the CAG, against the total provision of Rs 4,97,176.38 crore during 2019-20, an expenditure of Rs 3,91,483.19 crore was incurred leading to a saving of Rs 1,05,693.19 crore (27%). Out of the saving, Rs 87,795.48 crore was surrendered in March 2020. ‘’Surrender of savings I the fag end of the financial year indicated inadequate financial discipline,’’ it said.

The CAG has recommended that the government may make efforts to bridge the revenue gap and reduce its non productive revenue expenditure so as to move towards revenue surplus status. For this, the government may consider mobilizing additional resources through tax and non tax resources. The state government may consider future payments to state run companies in the form of grants instead of share capital so as to reduce the disparity in investment vis-à-vis return.

Further, the CAG has recommended that the government should enforce proper implementation and monitoring of budget to ensure that savings are curtailed, large savings within the grant/appropriation may be avoided and anticipated savings should be identified and surrendered within the specified timeframe. State government should assess and formulate to the extent possible a realistic budget based on reliable assumptions of the needs of the departments and their capacity to utilize the allocated resources.

Moreover, the CAG said the accumulated losses in respect of 88 PSUs as per the latest finalized financial statements as of September 30,2020 were a record Rs 43,071.81 crore. Of these PSUs, net worth was eroded in 11 PSUs of which three PSUs had made profit as per the latest accounts.

The CAG report said the net worth was eroded primarily in Maharashtra Power Development Corporation (Rs 1,013.03 crore), Maharashtra State Textiles Corporation (Rs 837.21 crore), Maharashtra State Financial Corporation (Rs 579.04 crore) and Maharashtra Electronics Corporation limited (Rs 368.38 crore).

Published on: Tuesday, December 28, 2021, 08:57 PM IST