CAG raps State govt. on fiscal management

The financial management and budgetary control measures of the State government have come under critical review of the Comptroller and Auditor General of India (CAG).

The CAG pointed out that the devolution of funds by the Centre to Andhra Pradesh during 2016-17 on the basis of the 14th Finance Commission (14FC) led to increase in revenue expenditure and not capital formation. The 14FC has recommended that the States’ share of Central taxes be increased to 42% from 32% from 2015-16.

The total Central tax transfer to the State was ₹26,264 crore in 2016-17. It was ₹1,627 crore (6.60%) less than the budget estimates. The Central tax transfers, however, were higher by ₹4,370 crore (19.96%) compared with the previous year.

The revenue expenditure of ₹1,16,215 crore at 16.62% of the Gross State Domestic Product (GSDP) was more than the budget estimates of ₹1,14,168 crore. During the year 2016-17, 85.17% of the revenue expenditure was met from revenue receipts and the balance was financed from borrowed funds, thus registering a revenue deficit of ₹17,231 crore.

Fiscal deficit

The capital expenditure was ₹15,143 crore, which was less than the budget estimates of ₹15,388 crore. The government, in its macro economic framework statement, targeted to reduce fiscal deficit to 3% of the GSDP as against 3.25% recommended by the 14FC. The fiscal deficit of ₹39,908 crore at 4.42% of the GSDP was still more than the prescribed limit. A loan of ₹1,670 crore was repaid by the A.P. Housing Corporation to the State government on the last day of the financial year. It brought the fiscal deficit to GSDP ratio within the prescribed limit of 3.25% by the 14FC on March 31, 2017. However, the same amount was credited back to the account of the corporation immediately on April 18, 2017, the CAG pointed out.

The CAG, referring to the Fiscal Responsibility and Budgetary Management (FRBM) Act, 2005, said that the government was yet to amend the Act as per the recommendation of the 14th Finance Commission for the period of 2015-20. The government had to amend the Act especially on fiscal targets — revenue deficit, fiscal deficit and outstanding liabilities to the GSDP ratio. The government also did not present the prescribed disclosure in the budget. “Non-disclosure of prescribed information compromised the objective of ensuring greater transparency in projecting the actual assets and liabilities as envisaged in the FRBM Act,” the CAG said.

Excessive/ unnecessary/ inadequate re-appropriation of funds was also observed.