Siddaramaiah claims state finances robust but CAG disagrees

Bengaluru: Despite claims of the state being in robust financial health  by Chief Minister Siddaramaiah who handles the finance portfolio,  the report of the Comptroller and Auditor General(CAG)  for the financial year ending March 2016 has pointed out glaring problems in the handling of Karnataka's finances.

Suggesting that the state needs to strengthen budgetary control  in all departments to avoid under utilisation of funds and be more realistic, the report has held the government responsible for miscalculation in budget planning, delay in debt service, steady increase in planned expenditure and a growing amount of unspent money in its treasury.

The report observed that 83 per cent of the state's revenue expenditure was on salaries, pensions, interest payments, subsidies, administrative expenses, grant-in-aid and financial assistance. While explicit subsidy had increased from RS 11,153 crore to Rs 13,149 crore,  implicit subsidy had risen from Rs 2,973 crore to Rs 3,913 crore. And although the Finance Commission had recommended including implicit subsidy in the finance accounts for transparency, this had not been done, it said.

While  noting that the share of capital expenditure had fallen to 15 per cent from the 16 per cent of the previous year, it regretted that around Rs 1,495 crore was blocked in incomplete projects and the return from investments of Rs 61,356 crore in companies and corporations was a mere Rs 69.40 crore.

It also observed that although the ratio of state tax revenue to GSDP  hovered between 10 per cent and 11 per cent, this included a book adjustment of Rs 82.83 crore, which increased revenue receipts artificially. Pointing out that the ratio of non-tax revenue to revenue receipts had significantly reduced from 5.85 per cent in 2011-12 to 4.51 per cent in the year in question, the CAG  called for measures to mobilise more of the former in coming years.