CAG slams UP for paying debt with borrowed funds

India’s official auditor, Comptroller and Auditor General (CAG), has slammed Uttar Pradesh government for servicing debt with borrowed funds and “leading the state to a debt trap”.

In the latest report of CAG (state finances and civil) for 2008-09 tabled in the ongoing state assembly’s budget session, it said almost 97 per cent of borrowed funds were used for discharging debt liabilities in the previous two years.

Meanwhile, in the Uttar Pradesh Budget proposed for 2011-12, the public debt of the state is likely to touch Rs 2,04,000 crore vis-à-vis Rs 1,88,000 crore in the current financial year.

CAG indicated the state's fiscal gains of 2007-08 showed deterioration in 2008-09. The sixth pay commission award had also put pressure on expenditure.

According to report, the per capita capital expenditure of the state was below the national average, although the government had given adequate fiscal priority to capital expenditure during 2008-09.

The average return on investments in statutory corporations, government companies, joint stock companies and cooperatives was 0.007 per cent during the last three years, while the average interest outgo was 6.49 per cent on borrowings during the period.

“The public debt ratio to Gross State Domestic Product (GSDP) will decrease to 32.1 per cent in the next financial year compared to 38.7 per cent in 2010-11,” State Principal Secretary Anoop Mishra had recently said.

CAG said detailed bills were not given for large advances drawn on abstract contingent bills. The position of Personal Ledger Accounts was also unsatisfactory as huge amounts were parked therein against the principle of legislative financial control.

Further, it indicted improper planning, inept financial management, deficient implementation and weak monitoring of programmes for inter-regional disparities and backwardness of Poorvanchal and Bundelkhand regions in Uttar Pradesh despite huge spending by the government.

It said Accelerated Irrigation Benefits Programme was conceived by the Centre to provide financial assistance to states to complete ongoing projects within the targeted period to cover more areas under irrigation. Six of 10 irrigation projects, taken up during 1996-06 under the programme, could not achieve the target due to execution of projects in an unplanned manner.

Projects were delayed from two to eight years, with cost overrun of 28 per cent to 916 per cent. Irrigation potential created could not be utilised to the extent of almost 55 per cent due to incomplete distributaries/minors.

Quality education could not be imparted due to deficient manpower management, ineffective academic administration and inept financial management. Ninety five per cent graduate and post-graduate colleges did not have proper infrastructure for imparting quality education.

Colleges were short of regular teachers to the extent of 49 per cent during 2004-09 and 17 government colleges did not have even a single teacher in one to five subjects for one to three years during 2006-09. The department surrendered large amounts due to incorrect budget estimation, CAG reported.