Bihar is heading towards a financial crisis as the state has shown trends of revenue deficit in the fiscal year 2019-2020 against the revenue surplus in fiscal 2018-19, said additional deputy (eastern region) Comptroller and Auditor General of India (CAG) Rakesh Mohan on Wednesday.
Revenue deficit is when the government has less income to meet its expenditure, whereas revenue surplus is when its net income is higher than projected expenditure.
The revenue deficit in 2019-20 is expected to be around ₹2000 crore as against the revenue surplus in 2018-19 of ₹6897 crore. These observations were made by Mohan, who censured the Chief Minister Nitish Kumar led state government for making unrealistic budget in the last few years, parking funds in personal ledger accounts (PLA) and personal deposit accounts ( PDA) worth crores and not providing records of various departments for audit.
“We can say that Bihar is heading for a financial crisis. The signs are not good because the state has been showing trends of revenue deficit in a year when there was no pandemic, which means there aren’t enough funds to meet all expenditures as per the budget outlay. The revenue of the state is decreasing. Capital expenditure (money spent on making assets, including infrastructure, health, education) is also showing a downward trend,” Mohan said.
Mohan, who met deputy CM and finance minister Tarkishore Prasad and principal secretary (finance) S Siddharth on Tuesday, said that he has flagged these issues to the government’s top officials and advised them that avenues of gaining income should be increased by the state.
“We are afraid that the figure of revenue deficit will increase further in 2020-21, during which the state faced economic contraction owing to Covid-induced lockdowns and overall revenue shortfall by states across the country,” he said.
The top auditor, who is in charge of Bihar, Jharkhand, Odisha and West Bengal, also expressed his displeasure over the way the state government has been making unrealistic budgets since the last few years by putting higher projections of expenditure in the outlay of various departments but ending up spending much less.
“In 2018-19, the total budget was ₹2.09 lakh crore whereas the actual spending was ₹1.60 lakh crore. The saving was ₹49,000, which is 23% of the total budget. In 2019-20, there are projections that the state government could have saved more than 30%. Many departments have not been able to spend even 40% of their allotted funds. This is wrong because the budgets in the last few years are being prepared unrealistically without taking into account how much funds are available,” he said.
Ram Avatar Sharma, accountant general (audit), Bihar, was also present during the interaction.
Highlighting that the accountant general was preparing the state’s financial report for fiscal 2019-20, Mohan was also critical of the way abstract contingent (AC) bills and detailed contingent ( DC) bills were piling up without reconciliation.
AC bills are generated when there is a withdrawal of funds for any expenditure by departments while the DC bills are submitted to provide an account of expenditure with related vouchers within six months. The AG audits the AC/DC bills for financial probity.
“Despite us raising objections over non-reconciliation of AC/DC worth ₹5770 crore in 2018-19, there has been not much progress. The same is the case of non-submission of utilisation certificates (UCs) against grants. These are all signs of financial mismanagement,” Mohan said.
Besides, the senior auditor also rued that various departments like Panchayati Raj, Urban Development, IPRD were not giving proper records for auditing to the AG office despite reminders. “Although we face problems in getting records from many departments for auditing, some are very chronic. Auditing is a constitutional obligation and such attitude is not acceptable,” he said. Mohan said.
Meanwhile, some financial experts believe that the state started facing a loss in revenue since liquor was banned in the state in 2016.
Odisha and Jharkhand continue to be revenue surplus states while Bihar and West Bengal are in deficit, said Mohan.
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