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    Home»Goa News

    UNREALISTIC BUDGETS: CAG

    adminBy adminOctober 20, 2021 Goa News No Comments7 Mins Read
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    Goemkarponn desk
    PORVORIM: The Comptroller and Auditor General has termed the State Revenue Surplus Budgets as Unrealistic and said it needs to work for more realistic budgets.
    CAG has also cautioned teh State on the debt profile as it would have to pay hefty EMIs in the next few years.
    “The State Government needs to work out more realistic estimates of receipts and expenditure while preparing the budget of the State. Thus, a greater fall in revenue receipts (16.42 per cent) and relatively less control over expenditure (12.26 per cent) than RE was the reason for the revenue deficit during 2019-20,” CAG says.
    On debts it says, the maturity profile of the State debt indicates that the liability of the State to repay the debt during the periods 2020-21, 2021-23 and 2023-25 would be ₹ 694 crore, ₹ 2,182 crore and ₹ 2,475 crore respectively,

    Finances of the State Government

    During 2019-20, the State could not achieve two key fiscal parameters. First, the State posted a revenue deficit of ₹ 325 crores in 2019-20 against a revenue surplus of ₹ 355 crores in the previous year.
    Second, due to an increase in fiscal deficit by 11.27 per cent and interest payments by nine per cent, the primary deficit increased to ₹ 529 crore in 2019-20 from ₹ 448 crore in 2018-19.
    However, the State Government managed to keep its fiscal deficit relative to GSDP (2.47 per cent) within the limit of three per cent fixed by the Goa FRBM Act and projection made by the Fourteenth Finance Commission (FC XIV).
    The outstanding Debt-GSDP ratio increased from 26.71 per cent in 2016-17 to 28.03 per cent in 2019-20. Thus, the State could not achieve the target of 25 per cent fixed under Goa FRBM Act and 24.92 per cent set forth by FC XIV.
    The State Government short-transferred ₹ 138.49 crores of employees and Government contribution to NSDL under the Defined Contribution Pension Scheme during 2019-20, thus, understating the revenue deficit and fiscal deficit to that extent.
    The off-budget fiscal operations amounting to ₹ 919 crore during the financial year 2019-20 resulted in understating of the overall debt by 1.14 per cent of GSDP. Further, taking into account the off-budget borrowings of the State, the total outstanding debt at the end of March 2020 worked out to ` 23,473 crore against ` 22,554 crore shown in the Finance accounts.

    Fiscal situation
    As per provision of Section 5(a) of the Goa FRBM (First Amendment) Act, 2014, the State Government was to eliminate revenue deficit from the financial year 2014-15 and maintain at that crores or generate revenue surplus thereafter.
    The State Government achieved this target in 2014-15 and maintained revenue surplus until 2018-19. However, the State had a revenue deficit of ₹ 325 crores in 2019-20.
    It could be seen that the revenue surplus of the State stood at ₹ 511 crores and ₹ 355 crores during the period 2017-18 and 2018-19. This was higher than the projections made in BE and RE. However, during 2019-20, there was a revenue deficit of ₹325 crores, as the actual revenue receipts (₹11,297 crores) declined by ₹ 2,219 crores against ₹ 13,516 crores (16.42 per cent) in RE.
    The actual revenue expenditure (₹ 11,622 crores) decreased by ₹ 1,624 crores against ₹ 13,246 crores (12.26 per cent) in RE.
    Thus, a greater fall in revenue receipts (16.42 per cent) and relatively less control over expenditure (12.26 per cent) than RE was the reason for the revenue deficit during 2019-20.
    The State Government needs to work out more realistic estimates of receipts and expenditure while preparing the budget of the State.
    Section 5(b) of the Goa FRBM (First Amendment) Act, 2014 envisaged achievement of fiscal deficit4 at three per cent of GSDP by 2013-14 and thereafter, to maintain the ratio or reduce it.
    The fiscal deficit to GSDP ratio was first brought below three per cent in 2014-15 and it remained so thereafter.
    The ratio of fiscal deficit to GSDP during 2019-20 stood at 2.47 per cent, which was within the target of three per cent prescribed under the Goa FRBM Act and FC XIV recommendations. The fiscal deficit during 2019-20 stood at ₹ 1,994 crore which was lower than the projections made in BE (₹ 4,470 crore) and RE (₹ 4,027 crore).
    The provisions of Section 5(d) of the Goa FRBM (First Amendment) Act, 2014 prescribed that total outstanding debt5 to GSDP be brought down to 27 per cent by 31 March 2015 and thereafter, maintain it below 25 per cent. However, the ratio of outstanding debt to GSDP registered an increase during the last three years from 26.75 per cent in 2017-18 to 27.90 per cent in 2018-19 and finally to 28.03 per cent in 2019-20.

    State’s Own Resources
    During 2019-20, revenue receipts decreased by ₹ 141 crore (1.23 per cent) over the previous year. The State’s own tax revenue decreased by ₹ 171 crore (3.51 per cent), non-tax revenue by ₹ 137 crore (4.77 per cent) and State’s share of Union taxes by ₹ 398 crore (13.83 per cent), offset by increase in grants from GoI by ₹ 565 crore (69.33 per cent).
    Around 66 per cent of the State’s revenue receipts during 2019-20 came from its own resources
    GoI released a compensation of ` 819 crore to the State Government to compensate for loss of revenue post-GST implementation, against the entitlement of ₹ 1,246 crores during the year.

    Share of Union Taxes and
    Duties and Grants-in-aid
    Over the five-year period (2015-20), central tax transfers increased by 29 per cent from ₹ 1,924 crore in 2015-16 to ₹ 2,480 crore in 2019-20.
    The State Government’s share of Union taxes and duties in 2019-20 decreased by ₹ 398 crore over the previous year and constituted 22 per cent of revenue receipts. The grants-in-aid from GoI increased by ₹ 565 crore (69 per cent) during the year compared to the previous year. Grants-in-aid constituted 12 per cent of revenue receipts during 2019-20.

    Revenue Expenditure
    During 2019-20, the revenue expenditure increased by 4.86 per cent (₹ 539 crore) over the previous year, and constituted 87.42 per cent of total expenditure. Revenue expenditure stood at 14.45 per cent of GSDP during 2019-20.

    Capital Expenditure

    During 2019-20, capital expenditure decreased by 23 per cent (₹ 489 crore) over the previous year. The share of capital expenditure in the total expenditure declined from 16.53 per cent in 2017-18 to 12.49 per cent in 2019-20. During 2019-20, capital expenditure (₹ 1,660 crore) was less than total public debt receipts (₹ 2,700 crore) by ` 1,040 crore.

    Debt Profile: Components
    The overall debt (₹ 22,554 crore) of the State Government at the end of financial year 2019-20 comprised internal debt of ₹ 15,746 crore (70 per cent), public account liability of ₹ 5,660 crore (25 per cent) and loans and advances from GoI of ₹ 1,148 crore (five per cent). The internal debt comprised of market loans (₹ 13,010 crore), special securities issued to NSSF (` 2,138 crore), NABARD (₹ 546 crore) and loans from financial institutions (₹ 52 crore).

     

    Debt profile: Maturity and Repayment

    The maturity profile of the State debt indicates that the liability of the State to repay the debt during the periods 2020-21, 2021-23 and 2023-25 would be ₹ 694 crore, ₹ 2,182 crore and ₹ 2,475 crore respectively, which may put a strain on the Government budget during that period. Further, ₹ 8,667 crore i.e., 51 per cent of the total public debt would be repayable within the next seven years. Therefore, the State Government would have to work out a well-thought-out borrowing-repayment strategy to avoid falling into a debt trap.

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