MP has negligible investment return, says CAG report

The state finance minister, who harps on his fiscal prudences and other fiscal reforms, came face to face with Comptroller and Auditor General (CAG) report that says return on investment made by state government was as low as 0.61 per cent during the last year as against the interest rate of 7.3 per cent which it pays on its borrowings.

“Government needs to invest its high cost borrowings more judiciously to get better returns and also to address the losses on account of various sick units by their restructuring and rehabilitation or by considering disinvestment of such units,” CAG advised today in its report on state finances for the year ended March 31, 2010.

“The expenditure pattern of the state revealed the revenue expenditure as a percentage of total expenditure continued to share a dominant proportion of the total expenditure at 75 per cent during 2009-2010, leaving less resources for expansion of services and creation of assets,” the CAG report pointed out.

The Non-Plan Revenue Expenditure (NPRE) of Rs 26,059 crore in 2009-10 remained higher than the normatively assessed level of Rs 19,257 by 12th Finance Commission for the year. Further, salary and wages expenditure, pension payments, interest payments and subsidies continued to be 78 per cent of the NPRE during the year.

“Slow progress of various social and developmental programmes in the state left an overall savings of Rs 11,390 crore. Excess expenditure of Rs 4,691 crore pertaining to the period 1993-95, 1997-2007 and 2008-09 requires regularisation under Article 205 of Constitution of India. There were instances of inadequate or excessive provisions of funds and unnecessary or excessive appropriation. Expenditure rush at the end of the financial year was another chronic feature noticed. In many cases the anticipated savings were not surrendered, leaving no scope of utilisation of these funds for state’s development.

CAG slams state PSUs
State owned public sector undertakings (PSUs) have turned into white elephants for one of the most poor states. Of the total 47 working PSUs, 27 have earned profit of Rs 147.81 crore and 11 PSUs have incurred losses of Rs 3,633.8 crore. The comptroller and auditor general report revealed that how PSUs are piling up with losses. “Six companies didn’t submit their first accounts and two companies had not started their commercial operations while one company capitalised on the expenditure in its balance sheet. The state PSUs had accumulated Rs 11,492 crore losses, attributed to various deficiencies in the functioning of PSUs. A review of three years’ audit report of CAG shows the state PSUs losses of Rs 425.42 crore and infrastructure investments of Rs 44.54 crore were controllable with better management. “The working PSUs registered a turnover of Rs 26,067.4 crore for 2009-10 according to their latest finalised accounts as on September 30, 2010. This turnover is equal to 13.4 per cent of the state GDP indicating important role played by state PSUs in its economy,” CAG said and recommended, “The quality of accounts of PSUs needs improvement. Of 49 accounts finalised during October 2009 to September 2010, 48 had received qualified certificates. Reports of statutory auditors on internal control of the companies indicated several weak areas.