Tar­gets not met, says CAG

Business Standard - - FRONT PAGE - ISHAN BAK­SHI

DE­SPITE COM­MIT­TING to the path of fis­cal con­sol­i­da­tion, the gov­ern­ment failed to meet its fis­cal and rev­enue deficits tar­gets in 2016-17, noted the Comp­trol­ler and Au­di­tor Gen­eral (CAG) of In­dia in its lat­est re­port. As seen in Chart 1, against the rev­enue, fis­cal and ef­fec­tive rev­enue deficit tar­gets of 2.1, 3.3 and 0.9 per cent of GDP, re­spec­tively, in 2016-17, the achieve­ment was 2.1, 3.5 and 1 per cent, re­spec­tively.

In its re­port, the CAG has also made some sting­ing ob­ser­va­tions on the Cen­tre's com­pli­ance with the Fis­cal Re­spon­si­bil­ity and Bud­get Man­age­ment (FRBM) Act, 2003.

First, as seen in Chart 2, there is marked vari­a­tion in the fis­cal deficit num­bers pre­sented in the bud­get and those de­rived from an­nual fi­nan­cial state­ments/union gov­ern­ment’s fi­nance ac­counts noted the CAG. Sec­ond, di­rect tax re­funds have risen sharply over the past few years from ~90,432 crore to ~1.72 tril­lion in 2016-17 as shown in Chart 3. But as the CAG noted, no cor­re­spond­ing dis­clo­sure was avail­able in the Gov­ern­ment ac­counts. Third, the gov­ern­ment has in­creas­ingly re­sorted to off-bud­get fi­nanc­ing of ex­pen­di­ture. For in­stance, on the rev­enue side, off-bud­get fi­nanc­ing was used for cov­er­ing and de­fer­ring fer­tiliser ar­rears/bills (Chart 4) and ar­rears of FCI (Chart 5) through bor­row­ings. Sim­i­larly, on the cap­i­tal side, off-bud­get fi­nanc­ing of rail­ways car­ried out through IRFC bor­row­ings are out­side bud­getary con­trol. They are not part of cal­cu­la­tion of fis­cal in­di­ca­tors de­spite fis­cal im­pli­ca­tions. Fourth, ac­tual gov­ern­ment li­a­bil­i­ties are higher than what was shown. As seen in Charts 6 and 7, tak­ing into ac­count the un­der­state­ment of Pub­lic Ac­count li­a­bil­ity of ~7.6 tril­lion, the to­tal li­a­bil­ity of the cen­tral gov­ern­ment at the end of the fi­nan­cial year 2016-17 works out to 50.5 per cent of GDP rather than 45.5 per cent. This was against the pro­jec­tion of 47.10 per cent pre­sented in the medium-term fis­cal pol­icy state­ment 2016-17.

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