The Comptroller & Auditor General of India on Monday said States must take steps to maintain proper accounting of subsidies and take prudent measures to reduce fiscal deficits, remove revenue deficits and keep outstanding debts at an acceptable level.
CAG India Girish Chandra Murmu said that the State must meet its capital expenditure, including loans and advances, from its own sources of revenue, or at the least confine the net debt to its capital expenditure. “While we understand the importance of subsidies to help the underprivileged, it is essential to transparently account for such subsidies and we require to distinguish between justifiable subsidies from freebies, which are not fiscally responsible,” Murmu said speaking at the Annual Accountant General’s Conclave.
Murmu also said that states must initiate measures to earn adequate returns on their investments and recover their cost of borrowed funds without resorting to implicit subsidies. All states, he said, must strive to meet its capital expenditure requirements, including loans and advances, from its own sources of revenue.
“States should take steps to earn adequate returns on their investments and recover their cost of borrowed funds without resorting to implicit subsidies,” he said. To improve fiscal management, both the Union Government and many State Governments have been implementing the Fiscal Responsibility and Budget Management (FRBM) Act in recent years.
Murmu further said that state finances have undergone several changes in recent years as a result of implementation of the Fiscal Responsibility and Budget Management (FRBM) Act, computerization of treasuries and implementation of the Integrated Financial Management System (IFMS). The State Accountants General, for example, has implemented the Voucher Level Computerisation (VLC) system for compiling accounting information at the level of vouchers.
The Accountant General’s conclave is organised by the CAG’s Government Accounts (GA) Wing which is attended by Principal Accountants General and Accountants General (A&E) to discuss issues regarding the maintenance of accounts of state governments, as mandated under the Constitution of India.