The Comptroller and Auditor General of India (CAG) is the authority established by the Constitution of India to audit all receipts and expenditure of the Government of India and the state governments. It is known news that recent CAG’s reports on Telangana government brought embarrassment to TS government (https://www.telugu360.com/cag-reports-embarrass-telangana-government/). Now recent CAG report on AP is out and CAG slammed AP too. CAG observations on AP as below:
None of the 271 projects was completed: CAG report for 2018 found that none of the 271 projects slated to be completed by March 2017, have been completed till date. These projects are in different sectors and Rs 54,602 crore were spent on them as on March 2017. CAG also observed original costs of the projects were revised and another Rs 28,036 crore added to the costs. CAG explained, non completion of projects within stipulated time resulted in hike in cost. State government explained the reasons for the delay as – land acquisition, court cases, sites not handed over by various departments, change in designs, and government ban on certain works.
High revenue expenditure : CAG reported, the revenue expenditure of AP is ₹1,16,215 crore at 16.62% of the Gross State Domestic Product (GSDP). It also noted, this amount was more than the estimated amount ₹1,14,168 crore ( Budget estimates). Also, only 85.17% of the revenue expenditure met from revenue receipts and the remaining met from borrowed funds. AP has revenue deficit of ₹17,231 crore. For any state, revenue deficit is huge concern. Revenue deficit means state is borrowing money to run the government (i.e. for paying salaries etc). Though it is ok to borrow for capital investments (i.e. building new projects) borrowing to meet daily expenses is dangerous and exposes poor financial management.
Meagre ROI on investments: CAG reported, Andhra Pradesh government invested Rs 8,795 crore in various corporations and companies but it could only earn an interest of Rs 4 crore and CAG observed, this return on investment was a negligible.
Poor cash and financial management by state government: CAG also observed that personal deposits accounts (PD accounts) were an area of serious concern. Huge amounts were credited PD accounts and reason given by AP government – this is to ensure uninterrupted progress in various schemes of the government. CAG observed, as the amounts are in PD accounts, un-utilized funds did not lapse to the government. Because of this, while AP government is paying high Interests (6.31% on borrowings), huge amounts were sitting idle in PD accounts. This shows the poor cash and financial management by state government.
CAG’s earlier report on Telangana slammed Telangana but TS government rubbished the reports. In fact earlier Congress governments also did not bother CAG’s negative reports. We have to wait and see how AP government reacts. But whatever be the reaction of governments, it is to be noted CAG is highest auditing official in the country and it has been pointing at poor financial management of state and central governments irrespective of which party is ruling.
