The Hindu : Tamil Nadu News : CAG faults fiscal management

Online edition of India's National Newspaper
Sunday, Aug 01, 2004

Tamil Nadu

Tamil Nadu

CAG faults fiscal management

By R.K. Radhakrishnan

CHENNAI, JULY 31. The Comptroller and Auditor-General has faulted the State's fiscal management and said the net availability of funds — for programmes and projects in 2002-03 — after payment of the principal on account of earlier liabilities and interest was only 20.1 per cent. The Government's liabilities stood at Rs.44,696.21 crores during 2002-03.

The Government continued to depend on ways and means advance/overdraft from the Reserve Bank of India to manage daily expenditure.

In 2002-03, it availed itself of the overdraft facility for 71 days compared to 148 days the preceding year and 76 days in 2000-01.

In 2002-03, capital expenditure declined by 8.4 per cent, while non-development expenditure rose by 11 per cent compared to the year before. Noting that the revenue expenditure grew by 19.2 per cent in 2002-03 over that of the previous year and that of receipts lagged behind at 10.7 per cent, the CAG said this resulted in a huge increase in revenue deficit and larger fiscal and primary deficits.

The fiscal liabilities including the contingent liabilities were more than 2.5 times the revenue receipts.

Rule violated

"The direct fiscal liabilities have grown much faster than the Gross State Domestic Product. The average interest rate on fiscal liabilities (10.1 per cent) over the last five years had also exceeded the average rate of growth of the Gross State Domestic Product (8.05 per cent) over the same period, violating the cardinal rule of debt sustainability," the report for 2002-03 notes.

53 firms in the red

Fiftythree government companies with a total investment of Rs. 1,216.48 crores were incurring losses.

The accumulated loss as on March 2003 was Rs. 3,826.29 crores.

Even in profit-making companies, the Government's returns ranged between 0.9 and 1.6 per cent during 1998-2003.

Even after the completion of 18-26 years of their existence, the turnover of three working companies was less than Rs. 5 crores in each of the preceding five years as per their latest finalised accounts, the CAG says.

"Of these three, one company had been incurring losses for three consecutive years and another company has been incurring losses for two consecutive years leading to negative net worth. In view of their poor turnover and continuous losses, the Government may either improve the performance of these three companies or consider their closure."

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