CAG flays Andhra govt for wrong accounting

hyderabad: the comptroller and auditor general has pulled up the andhra pradesh government for deliberately resorting to wrong classification of funds in gross violation of the rules made by the president of india. the wrong classifications had led to serious distortions in the financial data for the year 2000-01. as per the cag report, submitted to the assembly on the last of the budget session on saturday, the state government had put the expenditure of rs 553.71 crore (grant-in aid to local bodies) under the capital section instead of the revenue section of the accounts. the deliberate misplacing of the expenditure under a wrong heading resulted in the understatement of revenue deficit in the finance accounts for the year 2000-01, it report said. it also pointed out that a subsidy of rs 1,667 crore (of the total rs 2,228 crore) to energy sector was classified under the plan expenditure. “these incorrect classifications caused serious distortions in the financial data,� it added. the cag also chided the government for the poor financial performance of the state during the five-year period of 1996-97 to 2000-01 saying the financial position, in particular, declined significantly in 2000-01 due to extra-ordinary increase in revenue deficits. this is despite an increase in the revenue receipts, including in the state’s share of the union taxes and duties. the government had basically survived almost throughout the period on high volume of ways and means advances and overdraft almost throughout the year 2000-01, it said adding the revenue expenditure accounted for 87 per cent of the total expenditure of rs 27,183 crore. the revenue expenditure, which was non-plan in nature, shot up due to increased assistance for rural development, interest payments, pensions and subsidy to aptransco, the report pointed out. moreover, the revenue deficit during the year 2000-01 shot up by 236 per cent i.e., to rs 4,149 crore from rs 1,233 crore in 1999-2000. the fiscal deficit too increased significantly, from rs 4,976 crore in 1999-2000 to rs 7,306 crore in 2000-01. “this is despite increase in the centre’s transfers by rs 826 crore,� the report pointed out. the cag report exposed the declining capital expenditure that had come down to 8 per cent in 2000-01 from 9 per cent in the previous year. with regard to the returns from the state-owned undertakings, the cag pointed out that while the government was raising loans from the market at high cost ranging from 11 to 14 per cent, the returns on the investments made in the public undertakings were less than one per cent. the debt/gsdp (gross state domestic product) ratio has also increased substantially over the years leading to increased pressure on the state’s finances due to repayment and interest liability. and the borrowed funds were being spent largely for meeting revenue expenditure, leaving very little for spending on capital expenditure, according to the report.