Maharashtra Govt. Spent 90 % of Loans on Debt Repayment; Development Neglected: CAG

Maharashtra government failed to utilize its borrowings for the development of the state, but spent around ninety per cent of the total borrowings on repayment of outstanding loans and bonds, according to the Comptroller and Auditor General of India (CAG) report placed in state assembly on July 20.

“The average expenditure on debt-servicing (repayment of principal and interest) during 2017-18 was Rs 30,652 crore, which accounted for 89.1 per cent of average public debt receipts during the same period, implying that a larger percentage of debt was being used for debt-servicing. This also indicated that the portion of the debt available for meeting developmental expenditure to promote growth was insignificant,” the CAG report on state finances stated. The total debt of the state amounts to Rs 3,95,858 crore.

While expressing concern over the decline in capital, CAG reportedly recommended the government to prioritise its spendings on creation of more capital assets.

The report also pointed out that the actual revenue deficit was Rs 8,536 crore as against the Rs 3,645 crore projected in the state’s budget 2016-17. The difference is due to the gaps between growth rates of the revenue receipts and revenue expenditure over previous year.

While the capital expenditure constituted 12 per cent of the total expenditure during 2016-17, it is 6 per cent less than the budget estimates of 2016-17, by Rs 5,457 crore (18 per cent).

Sangita Choure, principal accountant general, remarked that it is time for the state government to use Goods and Services Tax (GST) earnings to repay the debts instead of paying from further borrowings. “It is high time the government utilizes its exponentially increased GST earnings to repay its debts. The move will eventually help the government in spending its loans and the money saved for development works,” Choure was quoted saying.

In the first quarter of this year (between April and June), the state collected a GST of Rs 35,915 crore — a 39.5 per cent rise from last year.

The report also urged the government to initiate measures to ensure better value for money in investments, while warning against high-cost borrowed-funds invested in projects that bring low financial returns.

Furthermore, CAG recommended the government to come out with a definite plan for repayment of debts such that resources for development purposes are used widely.