Thursday, Sep 18, 2014

CAG blames BJP over poor tracking of central funds

The report also warned that huge market borrowings made in 2008-10 will burden the state in terms of repayment seven years down the line. The report also warned that huge market borrowings made in 2008-10 will burden the state in terms of repayment seven years down the line.
Express News Service | Bangalore | Posted: February 26, 2014 3:56 am | Updated: February 26, 2014 4:01 am

A Comptroller and Auditor General (CAG) report on Karnataka’s finances for the year ended March 2013 has pulled up the former BJP government in the state for failing to properly account for utilization of nearly Rs 6,649 crore central funds transferred to the state during 2012-13.

The report also warned that huge market borrowings made in 2008-10 will burden the state in terms of repayment seven years down the line.

The report tabled in the legislature reflected fears of the Congress government, which came to power in May 2013, over the state’s finances.

The report recommended better accounting and management systems for improved tracking of funds transferred directly to the state for central schemes.

“The Government of India transferred Rs 6,649 crore to implementing agencies of the state during 2012-13. The transfer of funds to state implementing agencies directly ran the risk of inadequate monitoring of utilization in absence of uniform accounting procedures and effective monitoring systems,” the CAG report stated.

“Management information systems may be established and existing Central Plan Scheme Monitoring System utilized effectively for real-time accounting and monitoring of funds transferred directly to state implementing agencies of central sector schemes,’’ the report said.

The report focussed on high borrowings by the state government to meet expenditure. “The repayment obligation would increase enormously after seven years due to huge market borrowings in 2008-10,” the CAG stated.

“Forty six per cent of open market borrowings are in the maturity bracket of above seven years. The resource gap turned negative during 2011-13. This was a result of revenue receipts being the same as growth of total expenditure. This meant the state had to depend on borrowings for meeting current revenue and capital expenditure,’’ the report states.

The CAG recommended the state government to borrow prudently and not burden future generations with high-cost debts. “The practice of borrowing based on necessity rather than availability should be strictly adhered to. Parking of funds either in nationalized banks/deposit accounts should be avoided,’’ the CAG report said.

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