The Comptroller and Auditor General of India(CAG) has objected to the State for not disclosing in the budget documents of FY 2022-23 how much it borrowed off the budget. It said that overall debt sustainability suggests that upon accounting for outgoing servicing related to off-budget borrowings, net public debt available to Government will be negative.
“The State’s finances may be under significant pressure as a result, and this could push its debt sustainability into an undesirable level”, says the CAG in the State Finances Audit Report 2022-23. Additionally, most of market borrowings have been utilised to provide loans/advances to PSUs/SPVs/ABs for OBB servicing(principal and interest). “From debt sustainability stand point this is not a good practice,” according to the report.
After three years, Karnataka reported positive revenue surplus of Rs. 5,944 crore as against target fiscal deficit pegged at 5% of GSDP. The state recorded fiscal deficit of Rs. 32,556 crore (2.48% of GSDP) which was well within permissible limits after two years. Also according to medium term fiscal policy statement, ratio between outstanding liabilities and GSDP should be target at 25%. This figure represents a ratio total outstanding liabilities (Rs3.49 lakh crore) vis-a-vis GSDP achieved by Karnataka accounting for 26.1%.
“The state did not achieve this target for third time consecutively,” noted CAG; whereas XV FC prescribed ceiling with respect to OBBs other than those include constituted less than one-third or more than one-fourth (between 29.7% or less & above 30%) of respective states’ GSVA’s size.” Taking into account OBBs worth Rs1.18 lakh crore, this ratio (for Telangana) would then stand at 35.64%, which is 5.94% above the FC ceiling.
The audit estimated Rs.1.18 lakh crore as OBBs. Further, State Government extended additional loans of ₹17,829 crore —₹8,696 crore for interest payment, ₹3,531 crore for principal repayment and ₹5,602 crore without giving details whether it was interest payment or principal repayment in 2022-23 relatable to OBBs.
CAG said outstanding public debt increased by about 12%-19% over the last half a decade according to the analysis of indebtedness towards stabilization. “Till 2020-21, there was an increase in this ratio year after year but it showed a declining trend for the remaining two years only.” It came down from 24.63% in 2020-21 to touch a lower mark of 23.04% for FY22-23.
According to finance accounts total value of state government guarantees amounted to Rs1.98 lakh crore as on March-end 2023 and within these were those given by other entities like Telangana state civil supplies corporation (Rs50,000 crore) and Telangana state seeds development corporation (Rs398 cr).
Discoms’ disclosure was short of Rs16,000 crores while no documents showing risk associated with these assurances were provided_” Even the guarantees which should have been classified as direct 100% liability were being classified as medium to very low risk,” said CAG’s report.
