CAG calls AP government's bluff

Desaraju Surya
Hyderabad: In a damning indictment, the Comptroller and Auditor General today called the AP government's bluff saying its financial management was “grossly deficient.”
For a state that boasted of presenting its annual budget in excess of Rs one lakh crore for the last three years, the CAG’s latest observations were seen as a rap on its knuckles.
“Financial Management with regard to budgetary practices, expenditure controls and mobilisation of resources was deficient. In fact, budget estimates were totally unrealistic in the all years from 2006-07 to 2008-09 as there was either huge overestimation or underestimation,” the CAG observed in its report (civil) for the year ended March 31, 2009, which was tabled in the state Assembly.
The report was prepared by Principal Accountant General G N Sunder Raja.
The report pointed out to the “huge variations in budget estimates and actual expenditure” with “large unnecessary supplementary grants, non-surrender of anticipated savings (by different departments) and expenditure without provision.”
The CAG also found fault with the government’s tax recovery mechanism saying it was not effective.
“The tax recovery mechanism was not effective and the state government resorted to sale of lands for revenue mobilisation. Arrears of revenue accumulated to Rs 2,413 crore as of March 2008, of which Rs 862 crore (36 per cent) was due for more than five years,” the report said.
During 2006-09, the state government targeted to garner funds aggregating Rs 24,450 crore through sale of land. Against this, it could raise only Rs 10,578 crore (44 per cent) leaving a gap of Rs 13,872 crore. Of this, revenue realised during 2008-09 was just Rs 2,131 crore (18 per cent of the estimate). The percentage of actuals to Budget Estimates under Capital Account decelerated to 65.51 from 99.48 and 98.51 during 2007-08 and 2006-07 respectively, the CAG report noted.
Simultaneously, Revenue Expenditure registered a growth from Rs 39,648.83 crore in 2006-07 to Rs 58,624.76 crore in 2007-08.
“Such a dependence on sale of land would have been appropriate in extraordinary circumstances and that too after exhausting other avenues such as collection of tax arrears and tightening leakage of revenue,” the CAG observed.
Monitoring by Finance Department with regard to utilisation of 12th Finance Commission grants was ineffective resulting in non-release of further grants by the Government of India, the CAG said, adding that Rs 179.55 crore remained un-utilised in urban and rural local bodies.
The CAG, however, patted the government for not availing of Ways and Means Advances for four years in a row due to “better management of cash balances.”
The state government also received debt relief of Rs 1,186.31 crore and Rs 703.08 crore during 2006-07 and 2007-08 respectively from Central Government under Debt Consolidation and Relief Facility due to “good fiscal performance”, the CAG report pointed out.