Unrealistic budgetary assumptions found in Tel finances: CAG

The CAG in its report on 'State Finances' of Telangana for the year ended March 2015 said evidence of unrealistic budgetary assumptions and weaknesses in expenditure monitoring and control were noticed during the year.
"The entire supplementary provision (Rs 5,359 crore) proved unnecessary as the actual expenditure (Rs 64,097 crore) incurred was less than the original budget provision (Rs 1,01,323 crore) and savings for the current year stood at Rs 42,584 crore (40 per cent). Out of the savings, Rs 24,622 crore were surrendered on March 31, 2015," the CAG said.
Several policy initiatives taken up by the government were either unfulfilled or were partially executed, primarily due to non-approval of scheme guidelines, non-commencement of works for want of administrative sanction and poor project implementation, apart from non-release of funds, it said.

"Excess expenditure of Rs 304 crore was incurred during 2014-15 without legislative authorisation," it said.
"Lumpsome provisions (Rs 2,555 crore) without specific details of expenditure were included in the budget for 2014-15. The entire provision was surrendered at the end of the year," the CAG said.
There were several instances of budgetary misclassifications on subsidies, subvention from Central Road Fund etc, which indicated deficiencies in budget formulation, it said.

"Unrealistic budgetary allocations resulting in substantial savings, unnecessary supplementary grants, expenditure incurred without provision and excess re-appropriations, resulting in excess provision are indication of poor budget management," it said.
Telangana came into existence on June 2, 2014 and the CAG report is prepared on the Finance and Appropriation Accounts for ten months.

The state registered a revenue surplus of Rs 369 crore during 2014-15 and total outstanding liabilities constituted 22.79 per cent of GSDP, which was within the ceiling of 27.6 per cent stipulated in Fiscal Responsibility and Budget Management (FRBM) Act for 2014-15.
Although the state government accorded fiscal priority
to development expenditure during 2014-15, it did not ensure that the allocated funds were released fully for the intended purposes.
"State outlay on education (11.57 per cent) in particular, was less than that of the General Category states (16.23 per cent). Further, the share of social sector expenditure to aggregate expenditure (34.42 per cent) was also lower in the state, compared to the General Category States (36.50 per cent).

"Maturity profile of debt indicates that the state has to repay more than 50 per cent of debt within seven years," it said.
The CAG has pointed out inaccuracies in Financial Reporting.
There were delays in submission of annual accounts by several autonomous bodies or authorities, which dilute accountability, it said.
"Utilisation Certificates were furnished without actual utilisation or not furnished at all for large amounts both by the state and the implementing agencies for the funds drawn for execution of schemes. Detailed Contingent bills were not submitted in violation of prescribed rules and regulations which is indicative of lack of internal controls," it said.

"Omnibus Minor Head 800 continued to be operated during the year for recording expenditure and receipts relating to several items even where there were earmarked heads of accounts. The expenditure booked under this head affects transparency in financial reporting and distorts any meaningful analysis of allocative priorities and quality of expenditure," the government auditor said.
The CAG said it noticed that there was "non-reconciliation
of 68 per cent (Rs 41,097 crore) of total expenditure and 69 per cent (Rs 35,346 crore) of total receipts" during the year indicating disregard for codal provisions and financial rules by the Controlling Officers.
This would lead to the risk of non-detection of leakages in revenue and irregularities in expenditure, it said.

Similarly, 47,198 vouchers in support of payment made for an amount of Rs 1,804.79 crore from the PAO/Treasuries were not received in the office of Accountant General leaving the system vulnerable to the risk of misappropriation and fraud, it added.