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Kerala’s financial status not sound: CAG

Thiruvananthapuram: Rise in revenue and fiscal and primary deficits have taken their toll on the financial health of the State in 2016-17, the Comptroller and Auditor General has reported.
According to the CAG report on State finances for 2016-17, tabled in the Assembly on Wednesday, revenue deficit rose from ₹9,657 crore in 2015-16 to ₹15,484 crore, fiscal deficit from ₹17,818 crore to ₹26,448 core. The report also says that the share of capital expenditure in total expenditure has increased during the past two years. Fiscal deficit was 4% of the GSDP (Gross State Domestic Product) against the 14th Finance Commission recommendations to anchor it at 3%.
The 9.53% growth of revenue receipts posted during the period was the lowest growth rate in the past five years. The State’s own tax revenue (SOTR) too recorded the lowest growth rate of 8.16%. The CAG has recommended that the government rein in fiscal deficit to secure the benefits recommended by the 14th UFC and take action to step up SOTR collection. Revenue expenditure increased by 15.77 % over the previous year and 63% of this was constituted by the committed expenditure and it absorbed more than 76% of the revenue receipts.
Interest and pension payments consumed 16% and 20% respectively of the revenue receipts, which, the report says, is a matter of concern for the State. The average return on investment was 1.35% in the last five years, while the government paid an average interest at the rate of 7.18% for its borrowings. As much as 68% of the loans raised during the period was used for debt servicing. About 16% of the budgetary allocation was surrendered during year end. This included four grants and one appropriation. Imprudent reappropriation of funds points to lack of skill of officials in assessing their requirements. Funds released to District Collectors for various schemes were accumulated in the Treasury Savings Bank or accounts of nationalised banks. Considering the accumulation of unspent funds in the MLA Asset Development Fund year after year, the CAG has proposed the government to review the transfer of funds for such purposes. The CAG has recommended the Collectors to review the fund utilisation for various schemes once in six months.

 

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