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The Comptroller & Auditor General (CAG) has criticised the Maharashtra government for the burgeoning gap between growth rates and revenue receipts, higher non-Plan expenditure, a fall in the capital expenditure and cash balances.
The CAG report for the year ended March 2014, when the Congress-National Congress Party (NCP) alliance was in power, was presented on Friday by Deepak Kesarkar, the minister of state for finance in the legislature.
The CAG also rapped the government for non-compliance in fiscal reporting. Delays were seen in submission of annual accounts by autonomous bodies and departmentally managed commercial undertakings. Besides, there were instances of large outstanding cases of losses and misappropriations for which departmental action was pending for a long time.
According to the CAG, the percentage of capital expenditure to total expenditure showed a declining trend from 15 per cent in 2009-10 to 11 per cent in 2013-14. The CAG suggested the state to give greater fiscal priority as increased priority to physical capital formation will increase the growth prospects of the states by creating durable assets. The CAG said the government could not achieve revenue surplus during 2013-14. The significant gap between the growth rates of the revenue receipts (five per cent) and revenue expenditure (12 per cent) over the previous year resulted in a revenue deficit of Rs 5,081 crore during 2013-14 from revenue surplus of Rs 4,211 crore in 2012-13.
The government could not maintain the growth of revenue receipts it achieved between 2010-11 and 2012-13. The rate of growth of revenue receipts decreased to 4.81 per cent in 2013-14 from 17.86 per cent in 2012-13. This apart, there was a decrease in grants in aid from the Government of India in 2014-14 compared to 2012-13 mainly due to under-utilisation/non-utilisation of 13th Finance Commission grants. Interest payments of Rs 21,207 crore in 2012-13 were higher than the projection of Rs 21,098 crore made in the Medium Term Fiscal Policy statement.
The CAG has rapped the government for surge in the non-Plan expenditure. Of the revenue expenditure of Rs 1,54,902 crore as high as Rs 1,28,992 crore was incurred on the non-Plan component. The non-Plan expenditure remained higher than the normative assessments made by the 13th Finance Commission (Rs 93,328 crore), the projections made in the Medium Term Fiscal Policy (Rs 1,25,647 crore) and projected in the Fiscal Correction Plan (Rs 1,21,699 crore).
On government investments in statutory corporations, rural banks, joint stock companies and cooperatives, the CAG said there was an unsustainable proposition. The average return on the government's investments in those agencies varied between 0.02 per cent and 0.05 per cent in the past three years while the government paid an average interest of 7.42 per cent to 7.54 per cent on its borrowings.
The CAG has suggested the government take steps to ensure better value for money in investments. “Otherwise, high-cost borrowed funds will continue to be invested in projects with low financial returns. Projects, which are justified on account of low financial but high social economic returns may be identified and prioritised with full justification for channeling high cost borrowings there. The working of state public sector undertakings which are incurring huge losses should be reviewed and a strategy should be worked out for those undertakings which can be made viable,” the CAG report noted.
