CAG 2019: Uttarakhand government is taking loans to repay the loan interest

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CAG

Special things
State’s economic growth rate is high but people are not getting any special benefit
The government could not maintain revenue surplus, a revenue loss of 1978 crore in 2018
Only one-third of the loan is being used by the government for development schemes

The report of the Comptroller and Auditor General of India (CAG) laid on the Table of the House on Tuesday till 2017-18 is showing that the state is not able to use its financial resources properly. The state is prospering financially but people are not getting the benefit of it as a whole. You have to take a loan to pay the loan interest. Only one-third of the debt is used by the government for development schemes.

Spending on salaries, pensions, and interest is increasing and the government has less money for development work. In an audit of the state’s economic situation from the year 2013 to 2018, the CAG observed that the state government could not retain the status of revenue surplus of 2013 for the subsequent years.

The initial deficit (the amount received on withdrawal of interest payments from the fiscal deficit) has also steadily increased and this means that the government has to borrow for the borrowed amount. Among all these, neonatal mortality was found to be higher than in other states. On this basis, the CAG also suggested more investment in the health sector to the state government.

Fast economic growth in the last few years

The CAG observed that the state has witnessed rapid economic growth in the recent past. From 2008-09 to 2017-18, the compounded economic growth rate (CAGR) at prevailing rates of GDP was found to be 16.30 percent and per capita income at 14.70 percent.

It was higher than other special category states. Similarly, Uttarakhand’s growth rate was higher than the national average in terms of per capita income. People living below the poverty line were found less in Uttarakhand than in other states.

main point
– From 2013 to 2017, about 74 percent of the debt was used to pay back the loan taken and interest on it. Therefore, only 25.41 percent to 39.10 percent of the loan could be used for development schemes.
– The outstanding debt increased continuously and it was more than the growth rate of the state. – Between 2013 and 2018, the state government used around 12.64 percent of the revenue to pay the loan interest.
– Revenue deficit contribution to fiscal deficit was seven percent in 2016-17, which increased to 25 percent the following year.
– Departments did not provide 102 Utilization Certificates relating to grants of Rs 164.92 crore to Accountant General Uttarakhand till March 2018.
– 231.51 crores of Contingency Fund, 156.07 crores in 2016-17 and 75.44 crores in 2017-18 did not reimburse till August 2018.
– The government had to borrow Rs 3987 crore out of a total of 7526 crores for the year 2017-18 for interest payments.
– The government paid an 8.13 percent average interest rate from the year 2013-14 to 2017-18.
– Neonatal mortality was found to be high.

Initial loss
2015-16 3154
2016-17 1744
2017-18 3948

revenue loss
2014-15 917
2015-16 1852
2016-17 383
2017-18 1978

Revenue Surplus in 2013-14
fiscal deficit
2013-14 2650
2014-15 5826
2015-16 6125
2016-17 5467
2017-18 7935

Successful here
1. 31 percent increase in non-tax revenue
2. Capital expenditure increased by 19 percent. Capital expenditure shows how much money the state government is raising for development schemes.
3. Debt payments increased by 53 percent. This means that the government is serious about dealing with debt.

Fail here
1. Own tax collection decreased by seven percent. Own tax collection is derived from GST, hotel tax, etc.
2. Debt and advance recovery reduced by four percent
3. Debt receipts increased by 16 percent
4. Revenue expenditure increased by 15 percent. This means that the government is spending more on committed items like salary, pension, and interest.

Budget estimates have not been accurate

The CAG report is also indicating that the budget estimates of the state government are also not proving true. While preparing the budget for a year, the Finance Department estimates where the money will come to the government and where it will be spent. A year later the actual data for that financial year is received by the government.

In a review of the 2018 budget, the CAG observed that the state had incurred capital expenditure (funds for development schemes) of Rs 5514 crore but the expenditure was Rs 5914 crore. In the budget estimate, the fiscal deficit was estimated to be Rs 2464 crore and the initial deficit was Rs 2887 crore. Fiscal deficit was 5471 crores and the primary deficit was 1061 crores.

GST proved to be a loss to the state

According to the report, Uttarakhand is now an industrial state. In such a situation, the collection of tax on the goods produced in the state is going out of the state. Right now the central government is compensating the loss due to GST to the state by 2022. In such a situation, the state is worried even after 2022. The state’s own tax collection is also declining.

Consumers are definitely taking some benefits from this. Before GST, the tax rate on goods in the state was five percent, 14.5 percent. The tax rate on most items in GST is 2.5 percent and six percent. In GST, the state had estimated to get Rs 4835.70 crore, which was 5259.37 crore.

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