Economy

AP Finances: CAG sees increasing debt burden, procedural lapses, diversion of Central funds

Our Bureau | | Updated on: Nov 27, 2021
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In the next seven years, the State has to repay ₹1,10,010 crore debt

The Comptroller and Auditor General (CAG) of India has “found” procedural lapses in management of finances by Andhra Pradesh government apart from increasing debt burden adversely impacting development in the State.

According to the CAG report for FY20 tabled in the Andhra Pradesh State Assembly, the share of interesting payments in the State revenue was at 15.90 per cent whereas the allowed limit as per the 14th Finance Commission was only 11.30 per cent. In comparison with the other States, the average of interest payments, administrative expenses and pension were high apart from the quality of expenditure, the report said.

The debts to be repaid by Andhra Pradesh were at ₹32,373 crore as on March 2020, 17.20 per cent higher than the previous year. Out of this, ₹26,096 crore debt was non-budgetary. In the next seven years, the State has to repay ₹1,10,010 crore debt,” the report said.

Diversion

The CAG also found that the grants being released by the Government of India for Central Schemes were being “diverted to other purposes” because of which the objectives of some of the Central schemes were not being met fully. The Andhra Pradesh government had to resort to new debts to pay the interest on the existing debts and repayment of old loans.

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“In the last five years, 65-81 per cent of new loans have been utilised for repayment of old loans,” the CAG report observed.

The Centre released grants of ₹16,608 crore and ₹11,781 crore for its schemes in 2018-19 and 2019-20 respectively of which the State government spent only ₹4,514 crore in FY19 and ₹5,961 crore in FY20, the report said. The diversion of central grants for schemes could also impact the release of subsequent grants to the State government, it added.

Procedural lapses

According to the report, there were many “procedural lapses” in the management of State finances by the Andhra Pradesh government, including disclosure of expenditure to the State assembly after it was made which is “unconstitutional”.

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The State Government did not adhere to the norm of maintaining a minimum balance in the Reserve Bank of India during the year 2020-21 for 221 days. The daily minimum balance should be ₹1.94 crore.

“However, the government was able to maintain this only for 145 days,” the report said.

Published on November 27, 2021

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