CAG raps Goa govt for fiscal 'indiscipline'

Despite the state government enacting The Goa Fiscal Responsibility and Budget Management (FRBM) Act 2006 for ensuring fiscal stability and sustainability, the fiscal liabilities have actually increased from 32.6 per cent of the GSDP in 2000-2001 to 44.64 per cent in 2005-06, according to a report of the Comptroller and Auditor General of India (CAG).

The report for year-ended March 2006 does not present a rosy fiscal picture as it outlines that the fiscal liabilities position of the state government has worsened during the five-year period that ended in March 2006. In fact, the report virtually indicts the functioning of the governments during these five years.

"The governments during these years miserably failed to maintain a constant debt/GSDP ratio. The debt sustainability has also deteriorated due to inability of the government to contain expenditure," the report stated.

"Fiscal deficit may be a good thing in the broader spectrum of the development of the infrastructure in the state, but the increase in fiscal liability is always bad for the financial health of the state," it further said.

The report also underlined that the revenue receipts of the state government in 2005-06 were Rs 2,169 crore, registering an increase of 19 per cent over 2004-05.

The revenue expenditure was Rs 2,191 crore, an increase of 13 per cent over 2004-05. Though mobilisation of revenue from its own resources increased in absolute terms, it decreased from 87 per cent in 2004-05 to 86 per cent of revenue receipts during the year.

According to the CAG report, 81 per cent of the revenue expenditure was under non-plan. "Fiscal deficit grew from Rs 550 crore in 2004-05 to Rs 603 crore in 2005-06 and fiscal liabilities grew from Rs 4,350 crore in 2004-05 to Rs 5,018 crore in 2005-06," says the report.

The government during these years did not try to revise the 'Goa Heritage House Tourism Scheme¿, as only three applications were received for assistance under it, the government has miserably failed to ensure the safety of the tourists, the prime source of revenue.

Also large number of tourism promotional and tourism infrastructure creation schemes were not implemented despite there being sufficient budgetary provisions.

Financial management was weak as there were delays in implementation of centrally-sponsored schemes and funds specifically provided by Eleventh Finance Commission were also not fully availed.

Despite approval of a Tourism Master Plan (TMP-2011) its recommendations have not been implemented though more than five years have passed since the formulation of this master plan, the report pointed out.

The report lamented that a comprehensive tourism promotional plan had not been prepared and there were deficiencies in system of empanelment of promotional agencies which were meant to carryout work pertaining to promotion of tourism through advertisements released in electronic and print media and participation in overseas events.

"Benefits that accrued from release of advertisements through spots in various channels were not evaluated. Huge amounts were expended in participation in overseas events. While the total tourist arrival for the period 2001-05 exceeded the projected numbers in TMP-2011, the arrival of foreign tourists was significantly less than the projected figures," according to the CAG report.

The CAG was also critical of the handling of removal of a stranded ship River Princess resulted in its becoming an environmental hazard in addition to enormous increase in removal cost (Rs 5.5 crore).

The report also did not appreciate the handling of the finance by the Goa University. A review revealed that the university did not adopt the accrual system of accounting. The accumulated deficit amounted to Rs 7.73 crore.

The infrastructure for distance education created at a cost of Rs 2.15 crore remained largely unutilised. The enrolment of students for many of the post-graduate programmes was low resulting in low student faculty ratio.

"Thirty one per cent of the academic posts were vacant. The continuance of full fledged works division with increased expenditure on pay and allowances even after completion of major works was unjustified. The University did not take action to get the land (163.02 hectares) taken over from Public Works Department (PWD), transferred and mutated in its name leading to uncertainty of its ownership," states the CAG's report card.

The stock purchases of the sub-divisions were not incorporated in the monthly accounts (Form 73) during 2003-06. The Budgets during 2001-06 were drawn up by Accounts Section without estimates from the Divisions.

Blocking of funds of Rs 88.27 lakh on purchase of pipes, Idle investment of Rs 80.18 lakh on construction of office building at Quepem, Rs 98.06 lakh on construction of residential barrack for Police Training School at Valpoi besides, uneconomical expenditure (Rs 2.99 crore) on event management of IFFI 2005 and delay in receipt of sponsorship amount of Rs 99 lakh from EMA pertaining to the Information and Publicity Department and excess disbursement of pension to the tune of Rs 15.55 lakh were noticed.

What is significant is that the CAG report underlined that the increase in the revenue receipt mainly owes to switching over to the Value Added Tax (VAT).