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CAG paints grim picture of Andhra Pradesh government's finances

Syed Amin Jafri

The Comptroller and Auditor General of India (CAG) has found significant deterioration in the financial health of the Andhra Pradesh government in a five-year period (1995-2000) coinciding with the rule of reforms savvy chief minister N Chandrababu Naidu.

The CAG painted a grim picture of the state's finances in the five reports pertaining to Civil, Commercial, Revenue Receipts, Finance Accounts and Appropriation Accounts for the financial year 1999-2000. The reports were tabled in the just concluded budget session of the State Legislative Assembly.

Referring to the sustainability, flexibility and vulnerability of the government in regard to its financial health for five years ending 1999-2000, the CAG said that the state had negative balance from current revenue (BCR) in four out of the five years, suggesting that the government had to depend only on borrowings for meeting its plan expenditure, except in 1997-98 when the BCR was positive.

The interest ratio had gone up from 0.09 in 1995-96 to 0.11 in 1999-2000, due to huge increase in interest payments. The debt/GSDP ratio had been increasing since 1997-98 and stood at 0.26 in 1999-2000, indicating increased pressure on the finances of the government.

The state's debt stood at Rs 336.3 billion as against the GSDP of Rs 1,300.93 billion in 1999-2000. The ratio of outstanding guarantees to revenue receipts, too, had increased to 80 per cent indicating a high risk exposure of the government.

The ratio of assets to liabilities has all along been less than one and on the declining trend, from 0.93 in 1995-96 to 0.73 in 1999-2000, indicating a deterioration in the asset-liability position.

The revenue expenditure accounted for 90 per cent of the total expenditure of the state government and was mainly on non-plan (86 per cent) in 1999-2000. The capital expenditure accounted for a low percentage of the total expenditure and its share had declined from 19 per cent in 1995-96 to 10 per cent in 1999-2000.

While the government was raising high cost borrowings at 11-14 per cent, its investments in government companies fetched insignificant returns of less than one (0.08 to 0.27) per cent dent during 1995-2000.

During the five years, the total liabilities of the government had grown by 90 per cent on account of 145 per cent growth in internal debt, 71 per cent growth in loans and advances from the Union government and 82 per cent growth in other liabilities.

The state government took recourse to ways and means of advances and overdraft for 291 days drawing an amount of Rs 77.56 billion in 1999-2000. The revenue and fiscal deficits had increased significantly over the past five years though they had declined during 1999-2000.

The decrease in revenue deficit in 1999-2000 was however achieved through partial freezing of expenditure of Rs 30.35 billion pertaining to water supply, sanitation, housing, urban and rural development and financial assistance to local bodies and other institutions.

On the revenue receipts, the CAG observed that as at the end of March 2000, the uncollected revenues in sales tax, state excise, motor vehicle tax, stamp duty and registration fees, taxes and duties on electricity amounted to Rs 22.65 billion, out of which Rs 10.08 billion were pending for more than five years.

Test check of the records of sales tax, state excise, land revenue, motor vehicle , forest and other departmental offices conducted during the year 1999-2000 revealed under-assessment/short levy/loss of revenue amounting to Rs 6.65 billion.

The CAG noted that the aggregate investment in 48 government companies and three statutory corporations as on 31 March 2000 was Rs 173.94 billion. Out of 48 government companies, 14 companies were non-functional being under closure, liquidation, merger etc.

The budgetary outgo from the government to 13 government companies and two statutory corporations during 1999-2000 was Rs 26.90 billion.

Only four companies and two statutory corporations had finalised their accounts for the year 1999-2000 and the accounts of the remaining companies/corporations were in arrears for periods ranging from one year to 16 years.

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