E-Paper
UP govt should revisit budgeting methods, says CAG report
CAG report points to variations in budgetary estimates and actual revenue over the years in Uttar Pradesh
The Comptroller and Auditor General (CAG) has noted that the Uttar Pradesh government was not preparing the state budget on the basis of real estimates and suggested that the budgeting methods should be revisited to make the budget estimates more realistic in Uttar Pradesh.
“The finance department should revisit their budgeting methods to make the budget estimates more realistic,” the CAG observed in its recommendation in the report on the revenue sector for the year ending March 31, 2019. The report was tabled in the state assembly during its Monsoon session here on August 18, 2021.
Giving details of the budgetary estimates of realisation of tax and non-tax revenue from 2014-2015 to 2019-2019, the CAG pointed towards large variations in budgetary estimates and actual revenue over the years.
This is not for the first time that the CAG has made such recommendations. The CAG, in one of its reports tabled in the state legislature here on December 17, 2019, had recommended that the state finance department should rationalise the budget preparation exercise.
“The finance department should rationalise the budget preparation exercise, so that the persisting gap between the budget estimate and actuals are bridged,” recommended the CAG in its state finances audit report for the year that ended on March 31, 2019.
About the estimates for 2018-2019, the CAG noted, “The overall growth of 23.34 per cent in own tax revenue during the year 2018-2019 (over 2017-2018) was mainly due to increase in State Goods and Services Tax (SGST) by ₹20,734.07 crore, state excise by ₹6606.40 crore, stamps and registration fees by ₹2335.46 crore and taxes on vehicles, goods and passengers by ₹526.33 crore.”
The CAG further observed: “There was overall increase of 52.06 per cent in non-tax receipts amounting to ₹10,305.85 crore during the year 2018-2019 over 2017-2018, mainly under the head ‘Interest Receipts’ which was due to more interest realised from loans to sugar mills and investment of cash balances under ‘Miscellaneous General Services’ which was mainly due to more transfers of ₹8271.28 crore from Sinking Fund to this head during the year 2018-2019 in comparison to that in 2017-2018.”
The CAG pointed towards the delayed response by the various departments, noting that a recoverable amount of ₹11,533.96 crore was brought to the notice of various departments in 12044 inspection reports (IRs) issued up to March 2019. It said even the first replies, required from heads of offices within four weeks of submission of the IRs, have not been received in time.
It recommended that the state government should evolve a mechanism to ensure that the departments promptly responded to the IRs.
The CAG also took exception to delays in submitting reply by the departments to the observations made in the audit reports.
“Significant delays were observed in submission of explanatory notes (replies of the departments) itself, with delays ranging between 193 days and 809 days in respect of 36 paragraphs (including performance audits) appearing in the CAG’s revenue audit report for the year ending March 31, 2014. Moreover, explanatory notes were not received (September 2020) for audit reports for the years 2014-2015, 2015-2016, 2016-2017 and 2017-2018 which were placed before the state legislative assembly between August 2015 to February 2020,” observed the CAG.
A table given in the report noted that out of 140 paragraphs of audit reports for August 2015 to February 2020, no explanatory note was received for 104 paragraphs.
The CAG noted that in order to ensure accountability of the executive, the department of finance had issued instructions in June 1987 to initiate suo motu action on all paragraphs/performance audits figuring in the audit reports irrespective of whether the cases were taken up for examination by the Public Accounts Committee or not.
“What the CAG has drawn attention to is an appropriate point. In the last many years, the state government has been overestimating both the revenue and the expenditure of its budget. Scoring a political point is one of the reasons the party in power wants to project a bigger size than the previous one without looking at the ground realities. It will be better to have budget based on real estimates in future,” said professor Yashvir Tyagi, former head of the department of economics, Lucknow University.
