Highlighting lack of prudent fiscal management, the Comptroller and Auditor General (CAG) of India has criticised Gujarat Government for raising excess market borrowings than required for financing its deficit.

The CAG, in its report for the year ended March 31, 2012, tabled in the state Assembly, also revealed that the state government had in its budget allocations, earmarked more funds for various departments and projects, which, however, it could not spend due to several reasons.

The report points out that government’s expenditure for 2011-12 stood at Rs. 80,222.83 crore against the approval of Rs. 85,743.21 crore, resulting in non-utilisation of funds worth Rs. 5,520.38 crore.

The CAG report stated that during 2011-12, the government raised excess market loans than required for financing its deficit, showing non-application of prudent fiscal management.

“As a result, the cash balance of the state as on March 31, 2012 stood at Rs. 18,632 crore, which was 24 per cent higher than that of previous year. The cost of holding surplus cash balances is high. Since maintaining huge idle cash balance is not prudent cash management, appropriate steps should be taken for spending on capital projects for creation of assets,” it said in the report.

It has also highlighted the steady increase of the outstanding fiscal liabilities.

“The outstanding fiscal liabilities have shown steady increase over the years, from Rs. 96,452 crore at the end of 2007-08 to Rs. 1,50,785 crore at the end of 2011-12,” it said.

The report has also taken a critical view of government’s financial accountability and budget management for non-spending and non-utilisation of allocated funds.

Pointing out the savings in grant amount of Rs. 501.70 crore pertaining to non-residential buildings of roads and buildings department, the report says, “it was on account of higher provision for new works, time consuming tender procedures, delay in preparation of estimates and non allotment of land.”

The report stated that there were instances where funds allocated for backward classes were not utilised.

Delay in administrative approvals, technical sanction and tendering among others resulted in non-utilisation of funds worth Rs. 28.66 crore out of Rs 44.98 crore provided in the budget estimates for the welfare of backward classes, it said.

Similarly, referring to the grant for legal department, it pointed out that of the total savings of Rs. 160.50 crore, savings of Rs. 53.63 crore were due to non-approval of action plan and posts by the state, Rs. 7.60 crore due to non-filing of vacant posts and Rs. 6.48 crore due to non-releasing of payments against the claims which were under scrutiny.

The CAG has also pointed out instances of expenditure incurred without any budgetary provisions.

“As per the Gujarat Budget Manual, expenditure should not be incurred on a scheme/service without provisions of funds.

It was, however, noticed that an expenditure of Rs. 42.27 crore was incurred in two cases under two grants without any provisions and reasons for it were not intimated,” it stated.

The government auditor has pointed out instances of improvements in state government’s fiscal management, particularly in revenue expenditure.

“The overall revenue expenditure of the state increased by 78 per cent from Rs. 33,539 crore in 2007-08 to Rs. 59,744 crore in 2011-12 though its share in total expenditure declined from 82.27 per cent 2007-08 to 80.56 per cent in 2011-12 indicating improvement in quality of expenditure,” it said.

The report also took a positive note of the profits made by 41 PSUs of the state saying there was an improvement in their functioning during 2011-12 as compared to 2006-07 and accumulative profit have increased from Rs 1,826 crore in 2006-07 to Rs 3,929 crore in 2011-12.