• BJP Chief Spokesperson Lanka Dinakar Press Meet at AP BJP Head Quarters, Vijayawada on the topic ” CAG Report for the Financial Year 2021-22 financial year report exposes the financial management of the state is in disarray, anarchies continue today”
The CAG report for the financial year 2021 – 22 reveals that Andhra Pradesh’s state financial management is in disarray, and rampant fiscal anarchies have been exposed, which continue even today. The state administration is careless in the management of financial affairs. Adding the current situation in the state to the CAG report for 2021-22 reveals some stark facts.
The state’s financial management is chaotic and the governanceis anarchic As stated by the CAG, if the financial management mistakes of statehood are corrected, Andhra Pradesh’’s debt situation in the country is poor in the creation of assets due to inadequate capital expenditure.
According to the RBI report (according to the information sent by the State Government) Punjab’s Debt to gross domestic product (GSDP) is 48%. However, according to CAG’s revised statistics, Andhra Pradesh’s debt to gross domestic product (GSDP) is 40.85% for the financial year 2021-22, which shoots up to 50% when consider the State Government Corporation Loans served out of the State Consolidated Fund, Outstanding bills for Contractors and Suppliers, Discom Loans, Panchayat Funds diversion and illegitimate use of employees GPF are taken into account, which is the worst in India and reaches total debts of the State for Rs. 10.70 lakhs Crores together with the unauthorized debts (i.e. debts was not covered with in the FRBM’s limits ) as our party state president Purandeswari has clearly expressed in thepast (August 2023).
If the CAG reportfor the year 2021-22 has been observed by us today, it appears that it has been more than four years since the seed of debt has been sown. Apart from the budget loans, loans of corporations & Special Purpose Vehicles paid out of budgeted revenue amounted to Rs.1,18,393.81 crores and loans to DISCOMS amounted to Rs. 17,840.20 crores, it is clear that the CAG Report expressed that these loans shall be included with in the preview of the FRBM limit. Still if we see, same kind of financial mismanagement is implementing in the state by the YSRCP Government.
How many State Government owned Corporations are there in our State?, how many Corporations audit reports are pending for a long time? Out of the 118 corporate corporations in the state, 14 are declaring their accounts on time, another 23 corporations have declared their accounts up to the financial year 2020-21, and another 11 corporations have given their accounts in time up to the financial year 2019-20. The financial statements of the rest of the corporations have not been submitted till now, which means that there must be doubts about the actual amount of corporation loans raised by the Government of Andhra Pradesh.
According to the CAG report, as on 31 March 2022, the total budget borrowings were Rs.3,72,503 crores, the loans of corporations & special purpose vehicles paid out of budget revenue were Rs.1,18,393.81 crores, the total loans would be under the FRBM’s purview was Rs.4,90,897 crores. These total loans of Budget borrowings and off Budget Borrowings served out of Budget revenues are estimated to be around 6.50 lakh crores by 31st March 2023, which has crossed 7.50 lakh crores as of now. In addition to this borrowings, the Discom’s debts, panchayat fund diversions, bills to be paid to contractors and suppliers, and employees’ PF diversions, the total debt of the state is over 11 lakh crores right now.
CM YS Jagan Mohan Reddy is rapidly taking the state towards the record target of one dozen lakh crores of debt, and for the current financial year 2023-24,State Government has already brought 43 thousand crores of budget loans and another 23 thousand crores of loans from corporations already. CAG’s comments that the off-budget borrowing bypassing
the FRBM limit is falling on higher revenue and fiscal deficit.
The state government has turned a deaf ear to the CAG’s observations that changing the risk guarantee provision up to 90% of the revenue collection to 180% will put severe pressure on the state exchequer in the long run. The off-budget corporation’s loans have been diverted from the scope of FRBM Limits and the state government has opened the door for bankruptcy. Looking at the financial management of the state government, there is a danger of having to pay the guarantees given by the state government over one lakh crore when it gets invoked, and the state government does not have the ability to pay this amount.
The Union Finance Ministry has cracked down on corporation loans that are paid with budget revenue. Union Finance Minister Pankaj Choudhary while replying in the Rajya Sabha said that the amount being repaid through the budget contribution of the current state’s corporate loans is 6,718 crores for 2020-21, 22,366 crores for 2021-22 and 57,450 crores for 2022-23 would be considered under FRBM limits. He said that a decision has been taken to adjust the future loans covered under the FRBM limits. The CAG observes that the loans of corporations & special purpose vehicles were being paid from the consolidated fund of the state contrary to Article 293 (3), which required off-budget borrowings to be considered towards the net borrowings limit.
The CAG report shows that in the financial year 2021-22, the State has expired funds due to failure to spend it on time: Revenue Expenditure for Rs 25,256 crore and Capital Expenditure for Rs 1,124 crore, This failure has resulted the lower revenue deficit and fiscal deficit for Rs 26,380 crore.
Item wise sending failure by the state government :
1) Financial Union Grant – Medical : 488.15 Crores,
II) Centrally Sponsored Schemes Funding: 6,356.01 Crores, III) State Share Funding of Centrally Sponsored Schemes: 3,540.91 Crores,
IV) State Schemes : 7,762.17 Crores and
v) Other Expenditure: 8,232.57 Crores
On the one hand Rs.4500 Crores have been underspent in the Medical & Health Budget 2021-2022, which shows how careless the state government is towards the health of the poor. Finally, timely payments to hospitals’ drugs and suppliers or services has not made, which causes to the patients suffer.
On the other hand, Rs. 3830 crores have been less spent in relation to the budget of the Department of Agriculture 2021-2022, which means that the state’s neglect of agriculture and farmers has turned millions of acres into fallows in their state and agricultural production has decreased. Chief Minister Jagan Mohan Reddy’s price stabilization guarantee of Rs.3,000 crores, whether exists or not that only God knows. At least 1/3 of the budget allocation of the agriculture department is not spent, then in difference of the state government towards the farmers is understandable.
2021 – 22 CAG report, as per the recommendation of the Finance Commission, the Central Health Department has released 488.15 crores due to the fact that the funds have been lost.
The state government has gone to the pitiful position of not being able to spend funds and matching grants for centrally sponsored schemes like Jal Jeevam Mission, Amrit, Krishisanchai Yojana. Finally, the state government has miserably failed in providing state government schemes, irrigation and other capital expenditure, resulting in potholed state roads, conditions that cannot provide irrigation and drinking water, industrial infrastructure, and habitable infrastructure for the people. However, the same situation is seen in the state for the current financial year 2023-24.
It is a surprise that the revenue expenditure, which was supposed to increase to the next month of March after the previous month of February in the financial year 2021-22, astonishingly it had been decreased by 9,431.07 crores. The CAG sarcastically commented that the revenue income which should have increased on an average to the next month after March after the previous month of February was on average11,000 crores generally, but showing a huge increase in income to 20,368.73 crores means that the statistics have been changed at will.
Revenue Deficit & Fiscal Deficit Gap: 38,169.31 crores in the month of February for the fiscal year 2021-22 has decreased by 29,789.80 crores to 8,370.51 crores in the month of March pertaining to the Revenue Deficit. Also, simultaneously decrease the fiscal deficit by Rs 51,112.67 crore in the month of February to Rs 25,918.05 crore in the month of March for the Financial Year 2021-22 is an unimaginable in the statistical history of the state government. Chidambara’s secret, which is expected to increase from the previous month and decrease in fiscal deficit, is a mystery even to accounting experts.
The CAG report directly points to factors such as the “adjustment” between February and March of the fiscal year 2021-22, which resulted in a revenue deficit of over 4% to 0.72% of the actual gross state product, and a fiscal deficit of 6.5% to 2.08%. Although it is not mentioned in the revised statistics by the CAG, it should be considered as the most serious comment that the debt of Andhra Pradesh Debts is 40.85% of Gross Domestic Product (GSDP) after adjustments.
According to the RBI report (according to the information sent by the State Government), Punjab’s debt to gross domestic product (GSDP) is 48%. However, according to CAG’s revised statistics, the debt of Andhra Pradesh’s Gross Product (GSDP) is 40.85%, and if we consider factors such as Corporation loans served from the Budget revenues, long-term pending bills, illegal use of employee PF, it reaches 50% and Andhra Pradesh is the highest in India.
Disorganized Accounting System – Payments of Bills:
Accounting adjustments made between February and March 2022, however, have become routine right now. Corruption of percentages ruins the state by violating CFMS (Comprehensive Financial System) norms of transparent financial management of the state government, giving priority in payments to contractors and suppliers violating the orderly FIFO method.
Capital Expenditure :
The CAG objected that while the share of capital expenditure in the total expenditure of all the states in the country is 14.41%, the share in Andhra Pradesh is only 9.21%. The reason for this is that the actual expenditure in the capital expenditure estimate is not more than 45%. Capital expenditure is not properly spent and future income generating assets are not being created In the State of Andhra Pradesh.
The CAG warned that even the incurred debt could be spent on unproductive expenditure, causing serious damage to the people without development in the long run, risking the revenue to service the debt or a bleak future.
There is a suspicion that Chief Minister Jagan Mohan Reddy is working with the aim of bringing corruption in the state to a miserable state, no matter who comes to power in the near future. The future income of the state, the debts and guarantees without the creation of assets are at risk of crossing 12 lakh crores, the state already has not enough income to pay the salaries and maintenance expenses of the state government, the interest and installments to be paid on the loans, that is the million dollar question.
About the Author
