PSUs borrowing to buy equity of another firm defeats purpose: CAG

Criticising the practice of borrowing funds by a PSU to purchase equity stake in another PSU, government auditor Comptroller and Auditor General (CAG) said it defeats “the spirit of disinvestment.” The CAG made this observation while commenting on the disinvestment of Kamarajar Port Limited (KPL) which was sold to Chennai Port Trust (ChPT).

 

As part of strategic disinvestment, Government of India (GoI) sold (March 2020) its entire 66.67 per cent equity in Kamarajar Port Limited (KPL) to Chennai Port Trust (ChPT) for Rs 2,383 crore, General Purpose Financial Audit Report on CPSEs presented in Parliament said.

 

Due to poor financial condition, it said, ChPT had to raise a loan of Rs 1,775 crore at a rate of interest of 8 per cent per annum for purchasing the GoI’s stake in KPL.

 

“In addition to principal repayment, it put an additional interest burden of approximately Rs 142 crore (per annum) on the ChPT. Thus, the proceeds realised by GoI from disinvestment of KPL was substantially borrowed from the market by ChPT, which defeated the spirit of disinvestment,” it said.

Get foolproof IT system to check errors, CBDT told

 

Pointing out significant errors and irregularities in Corporation Tax assessments, CAG on Tuesday asked the Central Board of Direct Taxes to put in place a foolproof IT system and internal control mechanism to avoid such recurrences.  CAG audited 356 high value cases pertaining to Corporation Tax.

 

Extraction stage of groundwater at 63%: Report

 

The stage of extraction of groundwater in the country has increased from 58 to 63 per cent from 2004 to 2017, the CAG report said, adding Delhi, Haryana, Punjab and Rajasthan have a stage of extraction of more than 100 per cent, meaning extraction of groundwater has surpassed the recharge level.

 

AI paid avoidable Rs 44-crore fine: CAG

Air India paid an “avoidable” penalty of Rs 43.85 crore to Boeing for non-adherence with the contractually stipulated timelines under the agreement for an aircraft component service programme, CAG said.