The CAG has been very critical of the TS government's financial management and financial indiscipline. Against the TS government’s claim of surplus budget in the financial year 2016-17, the CAG report commented that the revenue surplus was overstated by Rs 6,778 crore on account of irregular accounting. Thus the state had a revenue deficit of Rs 5,392 crore in 2016-17.
- The fiscal deficit of Rs 35,281 crore stood at 5.46% of GSDP was understated by Rs 2,500 crore due to crediting of borrowed funds as revenue receipts.
- The ratio of fiscal deficit to GSDP, excluding the amount transferred under UDAY scheme (Rs 7,500 crore), was 4.3% exceeding the ceiling of 3.5% stipulated for 2016-17 by the 14th FC under FRBM legislation.
- Under UDAY scheme, against Rs 8,931.51 crore borrowed through UDAY bonds during the year, the state government released Rs 7,500 crore only to Discoms at the end of the yearand has been booked under capital expenditure as equity.
- The government utilised 34.74% of borrowed funds in 2016-17 for repaying its existing debt which increased by 18%. The CAG warned the state government that it will have to borrow further to repay its loans.
- CAG said that the interest payments was 10.4% of revenue receipts against the normative rate of 8.22% prescribed by the 14th FC.
- The total debt in 2016-17 was Rs 1.21 lakh crore, which is 31% more than Rs 91,985 crore in the previous year. The state used 7.12% of its tax revenue to repay the debt in 2015-16, it had to allocate 32.16% of tax revenue for the same during 2016-17.
- The aim of Mission Kakatiya is to restore all 46,531 tanks in the state in five years. The restoration of 21,670 tanks by August 2017 was proposed; however, only 28% of them, 7901 tanks, were restored. The removal of silt is an important component of the restoration works. The state government said that farmers were not interested in taking the silt because it was not useful for agriculture. The CAG said that this was not acceptable as guidelines prescribed priority to be given to tanks where farmers agreed to transport silt. The restoration works are supposed to irrigate 10 lakh acres of gap ayacut. The CAG observed that there was no mention of the gap ayacut in the estimates for the individual works.
KCR of TRS has successfully converted Telangana, a revenue surplus state in 2014 (Rich state) into a revenue deficit state (Poor state) with his mindless borrowing and senseless spending and bring the state to the brink of debt trap (borrowing to pay old debts). In the process KCR and TS had violated all accounting norms, bypassed rules, bungled the books, FC rules ignored, FRBM limits violated. In these matters, KCR is neither the first nor the last. Most states and Centre violates norms and rules, at will, and doesn't really care for CAG reports. Corruption is the key element.
With most of its spending on non revenue generating projects, Telangana will sink into deep debt trap very soon. With most of its revenues going for debt servicing - education, health care and welfare will take severe hit. The debt will be shifted for as long as possible… but eventually, someone will have to come to terms with it. The black hole totals up to huge sums of money; no one can pay; and the system gets bankrupted, or services rendered become inadequate and farcical. The future is austere if this equation isn’t balanced out.
Notwithstanding tall development and financial management claims of the Gujarat state, the CAG's five audit reports on the last leg of Narendra Modi's rule as the Gujarat Chief Minister after a 12-year stint has fished out in all disputed transactions worth Rs 25,000 crore that points to fiscal profligacy and rising debt burden.
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