The Comptroller and Auditor General (CAG) in its report on Telangana finances for the period ended March 2016 has observed “fiscal deficit, which stood at 3.23 per cent of Gross State Domestic Product, is understated by ₹3,719 crore by crediting budget borrowings to revenue receipts.”

This would have the effect of increasing the ratio of fiscal deficit to GSDP from 3.23 per cent to 3.87 per cent, the auditor said.

‘Unrealistic assumptions’

On financial management and budgetary control, CAG pointed out many instances of unrealistic budgetary assumptions and weaknesses in expenditure monitoring and control during the year.

The actual expenditure of ₹1,04,098 crore incurred was less than the budget provision of ₹1,39,360 crore and savings for the current year stood at ₹35,262 crore (25 per cent).

It further stated that several policy initiatives taken up by the government remained either unfulfilled or were partially executed, primarily due to non-approval of the scheme guidelines, non-commencement of works for want of administrative sanction and poor project implementation, apart from non-release of funds.

‘Poor management’

There were unrealistic budgetary allocations resulting in substantial savings, unnecessary supplementary grants, expenditure incurred without provision and excess re-appropriations, were indicative of poor budget management.

The auditor stated that there was non-reconciliation of 57 per cent (₹53,884 crore) of the total expenditure and 52 per cent (₹39,360 crore) of the total receipts with the books of the Accountant General during the year.

The state registered revenue surplus of ₹238 crore during 2015-16 and overstated due to misclassification of grants in aid under capital heads and crediting of budget borrowings of ₹3,719 crore to revenue receipts.