Setting off alarm bells for the BJP government in the state, a Comptroller and Auditor General (CAG) of India report has indicated that the state runs a risk of non-sustainability of its public debt.
The report — presented to the state legislature Wednesday — said the adequacy of receipts to cover for interest liabilities and primary expenditure (also referred to as the resource gap), had turned negative in the last five years.
In 2012-13, the state had achieved a positive resource gap of 6,400, which meant that the non-debt receipts were more than primary expenditure and interest payments.
But a steep rise in revenue expenditure and a squeeze in income has meant that the trend has been on a downslide since. In fact, in 2013-14, which was an election year, the resource gap had recorded a negative growth of 12,278.
Even in 2014-15, the state failed to get the fiscal balance right, and had to settle for a negative growth of 5,808. “That a positive resource gap in 2012-13 has now turned negative indicates the beginning of the risk of non-sustainability of debt in the medium to long run,” the CAG has remarked.
The state’s outstanding public debt stood at Rs 3.20 lakh crore in 2014-15, which is nearly 45 per cent over the debt it had to bear in 2010-11
The auditor further stated that the per-capita debt had now risen to Rs 21,126.
The CAG has advised the government to improve its resource mobilisation through tax and non-tax measures, and prune unproductive expenditure to bridge the resource gap, and lessen the non-sustainability risk.
The other worrying point for the government would be the declining trend of capital expenditure. The CAG has said the “percentage of capital expenditure to total expenditure decreased from 14 per cent in 2010-11 to 10 per cent in 2014-15”.
The CAG has observed that the percentage of capital expenditure to total expenditure in 2014-15 for Maharashtra was lower than the ratio of general category states. “Considering the declining trend over the last five years, there is scope for the government to prioritise its spending on creation of more capital assets.”
The BJP government has been promoting curbs to wasteful expenditure at the fag end of the year as one of its achievement.
But the CAG has questioned this by claiming that for 2014-15, “substantial expenditure ranging from 50 per cent to 100 per cent (department-wise) was incurred in March.”
It has now advised the government to evolve a system for a closer monitoring of expenditure plans of various departments.
It has also questioned the quality of expenditure, arguing that utilisation certificates amounting to Rs 61,148 crore were pending till March 31, 2015.
Undue benefits to paddy millers
The state was put to a loss of Rs 160 crore due to undue financial benefits that the government granted to private paddy millers. The government did not levy penalty of Rs 160.41 crore on the millers who had failed to deposit the 5.85 lakh quintal of milled paddy with the Food Corporation of India as mandated, the CAG has said.
The irregularity pertains to the period between 2010 and 2014. While the state ought to have collected bank guarantees totalling Rs 35 crore from these millers, even this was not done. The CAG has also observed that the state chose not to levy penalty on millers for delay in lifting paddy either.
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