Telangana understated fiscal deficit, overstated revenue surplus in FY18: CAG

The Comptroller and Auditor General of India (CAG) has said that the Telangana government has overstated its revenue surplus for 2017-18 by ₹3,744 crore and understated its fiscal deficit by ₹955 crore.

“This was a result of mis-classifications, non-contribution to statutory funds and classifying subsidies as loans,” said the report, which was submitted to the State Assembly, on Sunday.

There actually was a revenue deficit of ₹285 crore and fiscal deficit of ₹27,655 crore. The CAG said the State showed a revenue surplus of ₹3,459 crore and a fiscal deficit of ₹26,700 crore. It said the outstanding public debt to Gross State Domestic Product ratio was 19 per cent, which was well within the ceiling of 22.82 per cent fixed by the 14th Finance Commission.

Debt management

The outstanding public debt at ₹1.42 lakh crore went up by 18 per cent in 2017-18 over the previous year at a higher pace than the growth of GSDP. Interest payments are increasingly consuming revenue receipts.

“The interest payments relative to revenue receipts were much higher at 12.19 per cent against the target of 8.31 per cent fixed by the 14th Finance Commission.

Stating that the State had spent ₹79,236 crore on capital projects during 2014-18, it said 50 per cent of the funds were spent on irrigation and flood control. It, however, felt that delays in completion of projects not only adversely affected the quality of the expenditure but also deprived the State of intended benefits and economic growth.

“In respect of 19 irrigation projects, whose original cost was ₹41,201 crore, delays ranging from three to 11 years led to escalation of projected cost to ₹1,32,928 crore. An amount of ₹70,785 crore was spent on these incomplete projects,” it pointed out.

“The State government did not disclose financial results of any of the irrigation projects,” it noted. It wanted the government to compile working results of major irrigation projects to assess benefits from persistent heavy outlays to irrigation sector. “These working results should guide future investments in the sector,” it said.