Increasing revenue and fiscal deficits continues to show growing fiscal imbalance in the State, according to the Comptroller and Auditor General (CAG) of India report on the State Finances for the year that ended March 31, 2012.
Similarly, the increase in the ratio of revenue deficit to fiscal deficit has indicated the use of borrowed funds, largely for meeting current expenditure.
The maturity profile of debt indicated that the State would have to repay 49.6 per cent during the next one to seven years, says the CAG report, tabled in the Assembly on Monday.
There has been a decline in net availability of funds from borrowings, since a large portion is used for debt servicing. During 2011-12, the State borrowed Rs.8,880 crore from the market but net availability was only Rs.4,426 crore. A larger part could not be used for developmental activities and was instead used for non-developmental purposes.
Later, addressing a press conference in the capital, Principal Accountant General (Social and General Sector Audit) R.N. Ghosh said it had been recommended that the State evolve an appropriate control mechanism to ensure proper accounting and timely utilisation of funds flowing directly to implementing agencies through the off-budget route.
The CAG has recommended budgetary control in all departments and to avoid expenditure in excess of budget allocation.
Investments in statutory corporations, own companies, joint stock companies, and cooperatives amounted to Rs.4,206.43 crore. The average return on these was 1.3 per cent during the last five years, the report said.
Outstanding loans and advances to entities referred above amounted to Rs.9,404 crore, up by Rs.943 crore. As much as 65 per cent went to the Kerala State Road Transport Corporation, Kerala Water Authority, Kerala State Electricity Board, and the Kerala State Housing Board.
As per the CAG report, the ratio of financial assets to liabilities has deteriorated, indicating lack of adequate asset backup for liabilities. Revenue receipts have increased by 22.65 per cent over the previous year.
Tax and non-tax revenue has looked up. But revenue receipts, as a percentage of gross state domestic product (GSDP), declined. This indicated that the growth in tax revenue had not kept pace with that of gross state domestic product, the report said.
Revenue expenditure recorded a steep growth of 32.83 per cent. Of the total expenditure of Rs.50,896 crore, it accounted for 90.47 per cent. Nearly 70 per cent was spent on salaries, wages, pension payments, interest payments, and subsidies.
During the year, capital expenditure had gone up by 14.54 per cent to Rs.3,853 crore and accounted for 8 per cent of the total expenditure of the State. As a proportion of the GSDP, revenue deficit increased to 2.5 per cent and fiscal deficit to 3.9 per cent respectively from 1.3 per cent and 2.3 per cent in the previous year.