CAG raps state government for fiscal indiscipline, last-minute spending

The report emphasises ‘expenditure waste and execution failure’, highlighting the underspending of revenue and much lower spending on capital expenditure than budgeted, and amplification of bank guarantees, leading to contingent risk

NAGPUR: The comptroller and auditor general (CAG), in his report tabled in the state legislature, has rapped the state government for fiscal imbalance in the financial year 2024-25. The report emphasises ‘expenditure waste and execution failure’, highlighting the underspending of revenue and much lower spending on capital expenditure than budgeted, and amplification of bank guarantees, leading to contingent risk.

CAG raps state government for fiscal indiscipline, last-minute spending

“According to The Bombay Financial Rules, expenditure in the closing month of the financial year should be avoided,” states the report. “Contrary to this, expenditure in respect of 18 departments exceeding ₹100 crore and constituting more than 25 per cent of the total expenditure was incurred during March 2025. Ninety percent of the housing department and 77% of environment department budgets were spent at the last minute.”

The report also points out the suboptimal spending on capital assets. It states that of the borrowing of ₹1,43,635 crore, ₹87,060 crore or 61% was spent on repayment of debt, resulting in barely any assets generation. “Bank guarantees of ₹1.73 lakh crore given to government agencies towards their borrowings resulted in adverse internal debt balance. At the same time, loans of ₹12,135 crore to employees went unrecovered,” it states.

Five-year trends show fiscal deficits averaging 2.3% GSDP, but liabilities outpaced GSDP growth, says the report. The CAG speaks of intergenerational inequity, imprecise budgeting and weak asset tracking. “The state’s liabilities grew faster than its revenue (112% tax growth against 17% debt hike), leading to the erosion of intergenerational equity,” the report states. It also points to the problematic expenditure priorities of the government, which reduced spending on the social sector and economic services.

According to officials from the finance department, the two elections held in the financial year and the poor show of the Mahayuti in the Lok Sabha elections last year led to the government spending on populist schemes.

“Schemes like Ladki Bahin, Annapurna and youth stipends created a whopping burden of ₹96,000 crore, forcing the government to table a supplementary budget of ₹94,000 crore in July last year,” said an official. “Priorities were changed, and budgetary allocation and projects were put on the backburner for these schemes. This resulted in low spending on capital investment and development funds and also more borrowing. The schemes announced ahead of the assembly polls will have a cascading effect on the state economy for at least five years.”