CAG report slams govt for off-budget borrowings

The report, for the financial year 2023-24, stated that although the borrowings are serviced through the state government’s budget and are effectively considered the state’s own liabilities, they are not disclosed in the budget documents

MUMBAI: The Comptroller and Auditor General (CAG), in its report tabled in the state legislature on Friday, slammed the state government for its off-budget borrowings through state-controlled public sector undertakings as they bypass legislative scrutiny. It has also taken the government to task for spending beyond its means, and a mismatch between receipts and expenditure.

CAG report slams govt for off-budget borrowings

The report, for the financial year 2023-24, stated that although the borrowings are serviced through the state government’s budget and are effectively considered the state’s own liabilities, they are not disclosed in the budget documents.

“As outlined in the Maharashtra Fiscal Responsibility and Budget Management Act, the state government must provide full disclosure of its liabilities. In the financial year 2023-24, the government has stated the figure of ₹19.40 crore as outstanding, the audit noted that MSRDC had borrowed ₹10,200 crore from financial institutions, with the bank guarantee from the state budget,” it has stated.

The report has also said that the government’s off-budget borrowings not only impact fiscal transparency but also risk circumventing budgetary controls and legislative oversight. It has expressed the need for the government to improve its fiscal accountability by ensuring that all liabilities are comprehensively reported in the budget statements.

The CAG has recommended that borrowings be brought within the ambit of legislative control. At a conference in January 2025, the government had said it was aware of its rising liabilities on account of off-budget borrowings, and that measures were being taken to reduce them, the report stated.

According to the latest report submitted by the state finance department to the state legislature early this month, cumulative bank guarantees given to loans raised by state-controlled entities had risen to ₹1.44 lakh crore by the end of FY 2024-25. The government gave guarantees of a whopping ₹62,569 crore in 2024-25 alone.

The CAG report has also slammed the government for a continuous mismatch between revenue receipts and expenditure, leading to fiscal stress. It has pointed at how the planning of the budget was unrealistic as it could spend ₹5,82,297 crore, against a provision of ₹7,26,220 crore, resulting in overall low spending of ₹1,43,924 crore.

“At the same time, it made a budgetary provision of ₹1,05,373 crore in 2023-24, which constituted 16.97% of the original expenditure budget, proving them to be unnecessary when the original provisions of expenditure were not met,” the CAG report stated.

It also said the central government has capped the Maharashtra government’s net borrowing at ₹1,21,327 crore and has instructed the government to keep borrowing from all sources within the ceiling. The state government borrowed ₹97,507 crore in FY 2023-24.