CAG concerned over JK’s high deficit

Srinagar: While highlighting increasing trend of state’s dependence on high interest market loans to fund its expenditure, the Comptroller and Auditor General (CAG) of India has expressed concern over Jammu and Kashmir’s high deficit.
The CAG, in its report for the year ended March 31, 2014, tabled in the state Assembly recently, also revealed that there were 267 projects costing Rs one crore or above which overshot their scheduled dates of completion.
“Instead of improving state’s own revenue resources to generate developmental funds, the dependence of the Government on high interest rate bearing market loans to fund its expenditure was on increasing trend,” it said.
The government auditor said that the Development capital Expenditure has registered a persistent decreasing trend from 2009-10 to 2013-14, indicating that developmental works were getting inadequate resources.
“There were 267 projects/works costing Rs one crore or above which had overshot their scheduled completion dates.”
An amount of Rs 832.44 crores had been expended on the incomplete projects by March 31, 2014, it said.
“Targets for collection of power department’s tariff were not achieved. The shortfall in collection of revenue was Rs 1308 crore vis-à-vis targets while shortfall vis-à-vis expenditure on power purchased was Rs 2205 crores,” it said, pointing out that the government did not present a time bound action plan to recover minimum of 50 per cent of service charges after accounting for operation and maintenance expenses from the users as recommended by the 13th Finance Commission.
Besides missing the targets of the 13th FC, the state could not match the targets of fiscal deficit as per Fiscal Responsibility and Budget Management (FRBM) Act, 2006.
“The actual fiscal deficit was 5.9, 5.5 and 5.2 percent against targeted fiscal deficit of 4.7, 4.2 and 3.6 per cent of GSDP of respective years during 2011-12, 2012-13 and 2013-14.”
The state continues to be revenue surplus but only due to high levels of grants from the central government.
However, it said, the revenue surplus has witnessed a sharp decline from Rs 1100 crores (2012-13) to Rs 70 crore (2013-14). The state’s own deficit has been consistently high and steadily rising with expenditure growth far outpacing revenue mobilization.
“State’s own deficit is high mainly on account of high increase in expenditure and commitments on establishment related expenditure and serious shortfalls in bridging the resource gap in the power sector,” it added.
The original target of reducing the fiscal deficit to three per cent of the GSDP by the end of2009-10 was missed by a very wide margin as the actual fiscal deficit shot up to 9.1 percent, it said.
“An amendment in the FRBM Act in April 2010 raising the 2009-10 target to four per cent was of no avail. The State had to cap the fiscal deficit at 4.7 per cent of GSDP in 2011-12 and 4.2 per cent of GSDP in 2012-13 but the fiscal deficit actually was 5.6 and 5.5 per cent respectively. The year 2013-14 ended with a fiscal deficit of 5.5 per cent of GSDP which continued to be significantly higher than the target of 3.6 per cent.”
The fiscal deficit increased from Rs 3839 crore in 2009-10 to Rs 4554 in 2013-14 and during 2009-14, the it has increased from Rs 17576 crore to Rs 22543 crore, it added.
Meanwhile, the CAG has recommended government to prepare a time bound action plan to achieve the goal of recovery of at least 50 per cent of service charges from users and analyse the reasons for delays in completion of projects and take adequate steps for their completion to achieve the intended benefits.