The CAG has expressed concern that the Telangana government had utilised borrowed funds for repayment of public debt in the financial year 2021-22. File
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The Comptroller and Auditor General of India (CAG) has expressed concern the State Government had utilised borrowed funds for repayment of public debt in the financial year 2021-22.
“Normally, public debt is discharged using revenue surplus. However, the Government incurred revenue deficit of Rs. 9,335 crore during 2021-22. The borrowed funds were utilised for the repayment of public debt,” the CAG said in its report tabled in the Legislative Assembly on Sunday.
The CAG said the extent to which the fiscal deficit, as represented by borrowed funds, had been channelised towards the creation of capital assets was an indicator of prudent financial management. The borrowings of Rs. 46,995 crore in the year was partly utilised to meet the capital expenditure of Rs. 28,883 crore and loans and advances of Rs. 8,469 crore. The outstanding public debt of Telangana is Rs. 3.14 lakh crore, 27.4 per cent of the GSDP which was against the State Government’s own target set for maintaining outstanding public debt of less than 25 per cent of the GSDP.
The State at the end of 2021-22 had a revenue deficit of Rs. 9,335 crore and a fiscal deficit of Rs. 46,639 crore. A revenue deficit of Rs. 9,335 crore was against the target of maintaining revenue surplus status at the time of presenting the medium-term fiscal policy and strategy statement presented by the Government along with the 2021-22 budget. The fiscal deficit at Rs. 46,639 crore as per the accounts was 4.06 per cent of the GSDP during the period while the Government’s assertion was it would not exceed 3 per cent, the CAG said.
The fiscal deficit was met from net of borrowings and other liabilities (public debt of Rs. 42,936 crore), public account (Rs. 3,773 crore) and cash balance (-Rs. 70 crore). Around 50 per cent of the revenue receipts (Rs. 1.27 lakh crore) was spent on committed expenditure like salaries (Rs. 30,375 crore), interest payments (Rs. 19,161 crre) and pensions (Rs. 14,025 crore).
In 2021-22, loans totalling to Rs. 45,716 crore at interest rates varying from 6.89 per cent to 7.37 per cent repayable between 2032 and 2051 were raised from the open market. In addition, the State Government also raised Rs. 1,279 crore from other financial institutions like LIC, GIC and NABARD. A huge Rs. 67,274 crore was availed as ways and means advances and repaid during the year. “Thus the internal Debt raised during the year excluding Ways and Means Advances was Rs. 46,995 crore. Repayments of Internal Debt of State Government excluding Ways and Means Advances was Rs. 8,333 crore,” the CAG said.
The total loans and advances made by the Government was Rs. 52,379 crore including Rs. 8,441 crore towards loans and advances to government companies/corporations. Non-Government institutions and local bodies and Rs. 28 crore as loans to government servants during the financial year. Interest due on these loans amounted to Rs. 4,171 crore and only Rs. 47 crore (0.09 per cent of the total outstanding loan of Rs. 52,379 crore) was received towards repayment of loans and advances and this pertained to the loans given to government servants.
“Effective steps to recover the outstanding loans would facilitate the Government to maintain better fiscal position,” the CAG said.