CAG report debunks Telangana's revenue surplus state claims

| | Hyderabad
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CAG report debunks Telangana's revenue surplus state claims

Saturday, 31 March 2018 | Omer Farooq | Hyderabad

Raises stink on financial mismanagement

The claim of Telangana Rashtra Samiti government that the four-year-old state was revenue surplus has come under dark shadows with the Comptroller and Auditor General (CAG) coming out with a shocking report highly critical of the financial management of the state.

The report, which was tabled in the state assembly at the last moment of the budget session, has come up with a conclusion that, on the contrary, the state was a revenue deficit state and pegged the deficit at Rs 5,392 crore. This was in sharp contrast to the claim of the Chief Minister K Chandrasekhar Rao claiming that the state had a surplus of Rs 6,778 crore.

The CAG said that the claim of being revenue surplus was due to the irregular accounting.

The stinging report covers the financial year 2016-17 which ended in March last year. It said that the revenue surplus for that year was Rs 1,386 crore and it was overstated by 6,778 crore due to irregular accounting and, in fact, the state had a revenue deficit of  Rs 5,392 crore during 2016-17.

The CAG has also come down heavily on the state for exceeding the ratio of fiscal deficit to GDP ceiling of 3.5 under the Fiscal Responsibility and Budget Management Act and said that it was as high as 4.3 per cent, excluding the amount of Rs 7,500 crore transferred by the Centre under the Ujwal Discom Assurance Yojana (UDAY).

This also ran against the claim of the state government in the present budget for 2018-19 that the fiscal deficit was well within the norms of FRBM Act.

The CAG also pointed out that while the state government borrowed Rs 8,931 crore through UDAY bonds, it released only Rs 7,500 crore to the power distribution companies by the end of the year. Even half of the amount released was shown as equity instead of grant and it led to overstatement of revenue surplus to that extent.

Similarly, according to the CAG report, the capital expenditure during the year was Rs 33,371 crore and it was more than the budget estimate of Rs 29,313 crore. Its ratio to total expenditure stood at 28.2 per cent which was higher than the average of general category states at 19.7 per cent. Over 69 per cent of the expenditure was on consumption and only 31 per cent was on infrastructure and assets creation.

The CAG put the total debt of Telangana in 2016-17 at Rs 1.21 lakh crore, an increase of Rs 47,667 crore from 2014-15. The state has to repay 49 per cent of the debt amounting to Rs 56,388 crore within the next seven years. The repayment of debt as percentage of tax revenue increased from 7.12 during 2015-16 to 32.16 during 2016-17.

The report has evoked a sharp reaction from the opposition in the state. The BJP said that as the state government conspired to prevent a debate on the CAG findings by tabling it in the assembly at the last minute, it will take the report to the people and expose the failures of the TRS government.

State BJP President K lakshman, addressing a media conference in Hyderabad on Friday, said the situation would have been more pathetic if the Centre had not transferred Rs 7,500 crore under UDAY scheme.

“The CAG has exposed the failures of the state government.  It is a slap on the face of the government. Chief Minister K Chandrasekhar Rao has taken the state into a debt trap”, he said.

He also alleged that the state government had failed in proper utilisation of the central funds. “There is neither development nor welfare in the state”, he said, adding that out of the one lakh double bedroom houses promised for the poor, the state government had not even built a 1000 houses. There was no progress in works under the Mission Kakatiya. People were hoodwinked with false claims that the state was revenue surplus”, he said. “loans were shown as the surplus,” he added.

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