Punjab’s borrowing imprudent: CAG

The report also shows how the state’s borrowings have been imprudent. “The finance department raised open market borrowings on 12 occasions in 2009-10. Out of these,six were raised twice in a month. Due to defective record keeping,the government worked out balances wrongly,leading to excess borrowings.

This led to excess cash balances with the Reserve Bank of India (RBI) during the year and the state was consequently extra burdened to the tune of Rs 5.79 crore. Not only were funds borrowed in excess of limit but the state also did not resort to alternate economical means of availing the loans,” it added.

The report also reveals how the state has been standing guarantee for its statuary corporations,boards,cooperative institutions and local bodies with indiscretion. From Rs 26094 crore in 2007-08,state guarantees jumped to Rs 46,815 crore in 2008-09 and to Rs 51357 crore in 2009-10. According to the criteria of Fiscal Responsibility and Budget Management Act (FRBM),the percentage of outstanding guarantees should be capped to 80 per cent of the total revenue receipts of the previous year.

“However,the amount of outstanding liability as of March 2010 was Rs 33,295 crore,which was 161 per cent of the revenue recepits of the previous year and double the limit of 80 per cent prescribed by FRBM Act. This is a serious threat to the state’s financial stability and needs to be addressed by the government at the earliest,” the report stated.

It added that there are huge variations between budget estimates and actuals. “This indicates that either the budget estimates were not prepared with due care or collection of revenue was not monitored closely,” the report added.