Centre deviates from norm in settling accounts

In an unusual departure from norms, the central government has asked for regularising more than two-year-old expenditure from Parliament.

The sum is ~1.87 trillion but there is no financial implication. It only demonstrates the sluggishness at the Centre in finalising its accounts, which means the states have to depend on older data to make their point about revenue and expenditure mismatch.

On Monday the finance ministry tabled in Parliament a note on regularising differences in borrowing figures in respect of state government debt for 2016-17, along with the first set of the supplementary budget for the year 2020-21.

Every year, the ministry is supposed to get Parliament to approve all differences in expenditure — between what was voted on and what was spent. No money can be spent without Parliament’s approval. While the differences, as in this case of repaying debt, are sometimes vast and sometimes minor, the details are examined by a parliamentary committee. Based on its examination, the legislature gives its approval.

It is done by placing in Parliament the final accounts data for the previous financial year, which is prepared by the Controller General of Accounts (CGA). These numbers are also often referred to as “actuals” to place them apart from the Budget estimates and the revenue estimates of the government incomes and expenditures.

The CGA, by convention, signs off on these final numbers for the preceding financial year before the end of December of the succeeding year. The timing helps the government get a base to assign fresh numbers for the next financial year. As the box shows, for example, the final accounts for 2017-18 were signed off by the CGA on December 3, 2018. The table also shows this convention has rarely been flouted, except now. In the past 10 years since 2008-09, there were just two years when the November/december pattern was violated. The final accounts for the years 2010-11 and 2011-12 got ready only by the following March.

The final accounts for the year 2018-19 are, however, not yet ready to be tabled in Parliament even though they should have been so by December 2019. As the dates show, the delay is not ascribable to the Covid-19 pandemic. The accounts for 201819 have crossed even the March deadline.

It is for this reason that the expenditure department of the finance ministry has had to table the note, which also contains some other items of expenditure that overshot the legislative approvals. As its explanatory memorandum with the accounts notes, “The above excess expenditure have been scrutinised by the Public Accounts Committee (of Parliament), who, vide paragraphs 2 and 9 of Part–ii of Fourth Report (Seventeenth Lok Sabha), have recommended their regularisation under Article 115(1) (b) of the Constitution of India”.

The excess is not unusual, despite its size. As the memorandum explains: “The excess was incurred due to a higher volume of amount withdrawn by the State Governments in the penultimate days of the financial year to meet their financial obligations. There is no control on this count as the receipts/investments and withdrawals/disinvestment of funds in/from this head have a direct bearing on the availability of funds with the State Governments…”

But the trend in delay means any calculations of the loans outstanding against the states since March 2017 can only be provisional, as of now.