Bhubaneswar: The CAG report on state finances for 2017-18 fiscal year tabled in the Assembly by the Accountant General Thursday stirred a debate on how the state government has incurred debt from open market at higher interest despite having huge untied cash balance.
The report of the Comptroller and Auditor General of India (CAG) Thursday claimed that the state government resorted to market borrowings at higher interest rates despite having untied cash balance. The report also took a dig at the state government for going against the recommendations of the 13th Finance Commission (FC) in doing so.
“The 13th Finance Commission had recommended that the states with large cash balances should make efforts to utilise their cash balances before resorting to fresh borrowings. Out of the general cash balance of `25,305 crore, there was an untied cash balance of `13,436.83 crore,” the report said.
It also said that the state, however, resorted to market borrowings of `12,013 crore at interest rates ranging from 6.94 to 8.24 per cent contrary to the 13th FC recommendation. It also said that the state government should avoid large cash balances resulting in avoidable interest burden.
The CAG said that the transactions hinted that the Odisha government maintained large cash balances on a regular basis while being a fiscal deficit state at the same time. It said that against the mandated minimum cash balance of `1.28 crore, the state maintained `557.03 crore with the RBI as on March 31, 2018.
In reply to the government’s response that a large amount of the funds were tied up, the report said that market borrowings took place when untied cash of more than `13,000 crore was available.
The CAG also highlighted other facets of the financial status of the state. The report also said 274 Outstanding Detailed Contingency bills amounting to `14.55 crore were not submitted by 12 departments before the closure of the financial year which hints at breach of financial discipline and ‘enhances risk of misappropriation of public money’ and is an ‘unhealthy practice’.
The report said that the total outstanding debt of the state stood at `97,164 crore as of March 31, 2018.
The report also crticised the alleged failure of the government in achieving the target under Potato Mission. The report said, “…against the physical target of establishing 55 cold storages, only 23 (41.81 per cent) cold storages were established as of March 2018. Thus, the objective of achieving self sufficiency in production of potatoes by 2017-18 could not be achieved.”