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The Comptroller and Auditor General of India has pulled up the Finance Ministry for not making “sound” assumptions in the Budget documents as well as lack of transparency in its disclosures under the Fiscal Responsibility and Budget Management Act.
“The targets of fiscal indicators contained in the Medium Term Fiscal Policy Statement should be based on underlying assumptions which could be the base for preparing the Budget for the relevant year,” it said in an audit report on the compliance of the FRBM Act, 2003.
In the first-ever such audit, the CAG also noted that the projection for 2014-15 included in the Medium Term Fiscal Policy Statement in respect of gross tax revenue, outstanding liabilities, and disinvestment varied significantly from the actuals.
Similarly, projections for various heads of expenditure for 2014-15 in the Medium Term Expenditure Framework Statements of 2013-14 varied significantly in the Budget (BE) and Revised Estimates (RE).
The CAG also noted a structural imbalance in the composition of expenditure as the Plan expenditure to fiscal deficit ratio slipped to 90.6 in the RE from the BE of 108.3.
Significantly, the CAG also highlighted lack of transparency in direct tax receipt figures and lack of information on the quantum of refunds.
“During last five years period 2010-15, the refunds ranged from 13.03 per cent to 16.88 per cent of the total tax collection… Refunds of ₹ 1,17,495 crore (including interest on refunds of taxes) were made from gross direct tax collection in FY 2014-15 but this aspect was not disclosed in the Government accounts,” it noted adding that the accounts of the government were not transparent on tax revenue.
It also did not accept the Ministry’s reply that in Finance Accounts, figures for direct taxes are not shown separately.
Noting that in 2014-15, there was ₹ 8,123 crore of levies and cess which were not transferred, the CAG also asked the government to transfer specific purpose levies and cess collected to the funds earmarked for the purpose.
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