Fiscal irresponsibility tops CAG's faults list
The government may ooze confidence on meeting the targets set out in the Fiscal Responsibility & Budget Management (FRBM) Act for FY08 in its mid-year review of the economy.
By TNN |
NEW DELHI: The government may ooze confidence on meeting the targets set out in the Fiscal Responsibility & Budget Management (FRBM) Act for FY08 in its mid-year review of the economy, but the Comptroller & Auditor General’s (CAG) report for FY07 tells a different story.
CAG figures indicate that the government may miss the bus on this account despite buoyancy in revenue collections. The prime minister’s Economic Advisory Council had also expressed apprehensions about the government not achieving the FRBM targets, which entail reducing revenue deficit to zero in 2008-09. According to the road map, revenue deficit is to be cut to 1.5% of GDP in FY08 while fiscal deficit has to be brought down to 3.3% of GDP.
“The outlook for receipts in the subsequent part of the year looks more optimistic than anticipated at the time of Budget estimates. Thus, by the year-end, and notwithstanding the deviations witnessed in the first half of the year, the government is confident of successfully navigating through the FRBM road map,” said the mid-year review.
However, the annual report released by CAG on Friday showed a substantial deviation, in both revenue and fiscal deficits, from the provisional figures in the Budget. Against the Centre’s target of bringing revenue deficit down to zero and fiscal deficit to 3% of GDP by the end of next fiscal, the figures remain at 3.22% and 4.43%, respectively, for FY07. The figures have exceeded the target for that fiscal by 1.12% and 0.63%, respectively.
“The revenue and fiscal deficit relative to GDP during FY07 exceeded their budgeted levels instead of indicating a decline at least by a minimum annual rate of reduction (this) reflects a slippage in meeting the targets prescribed under FRBM rules,” the report observed.
CAG also flayed the government for incorrect budgetary assumptions by discouraging ‘injudicious’ reappropriation to sub-heads and ‘unnecessary’ supplementary grant. For FY07, there were net unspent provisions in 206 sections and excess in four sections under the grants relating to civil ministries.
Department of post could not use grants sanctioned under three heads while for defence the number was much higher at 11. However, the defence ministry exceeded its target spending on army. In 17 cases, reappropriation aggregating Rs 426.23 crore were injudicious, the report said.
“The statement is self-explanatory. The Centre should avoid incorrect budgetary assumptions. In some cases, the government has to reappropriate funds while at other places it could not use the funds properly,” said a CAG official involved in the preparation of the report.
CAG figures indicate that the government may miss the bus on this account despite buoyancy in revenue collections. The prime minister’s Economic Advisory Council had also expressed apprehensions about the government not achieving the FRBM targets, which entail reducing revenue deficit to zero in 2008-09. According to the road map, revenue deficit is to be cut to 1.5% of GDP in FY08 while fiscal deficit has to be brought down to 3.3% of GDP.
“The outlook for receipts in the subsequent part of the year looks more optimistic than anticipated at the time of Budget estimates. Thus, by the year-end, and notwithstanding the deviations witnessed in the first half of the year, the government is confident of successfully navigating through the FRBM road map,” said the mid-year review.
However, the annual report released by CAG on Friday showed a substantial deviation, in both revenue and fiscal deficits, from the provisional figures in the Budget. Against the Centre’s target of bringing revenue deficit down to zero and fiscal deficit to 3% of GDP by the end of next fiscal, the figures remain at 3.22% and 4.43%, respectively, for FY07. The figures have exceeded the target for that fiscal by 1.12% and 0.63%, respectively.
“The revenue and fiscal deficit relative to GDP during FY07 exceeded their budgeted levels instead of indicating a decline at least by a minimum annual rate of reduction (this) reflects a slippage in meeting the targets prescribed under FRBM rules,” the report observed.
CAG also flayed the government for incorrect budgetary assumptions by discouraging ‘injudicious’ reappropriation to sub-heads and ‘unnecessary’ supplementary grant. For FY07, there were net unspent provisions in 206 sections and excess in four sections under the grants relating to civil ministries.
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Department of post could not use grants sanctioned under three heads while for defence the number was much higher at 11. However, the defence ministry exceeded its target spending on army. In 17 cases, reappropriation aggregating Rs 426.23 crore were injudicious, the report said.
“The statement is self-explanatory. The Centre should avoid incorrect budgetary assumptions. In some cases, the government has to reappropriate funds while at other places it could not use the funds properly,” said a CAG official involved in the preparation of the report.
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