Karnataka budget allocations not getting spent: CAG report

The Comptroller and Auditor General (CAG) has recommended the government to be more “realistic” in its budget, noting that 11 per cent of the total provisions made in 2019-20 remained unutilised.

A debt sustainability analysis in the audit report also raised concerns over the rising public debt which was higher than GSDP growth.

The ‘state finance and audit report’ tabled in the Assembly on Wednesday also advised the government against seeking supplementary grants or appropriations without adequate justification as large amounts were not spent by the government.

Comparing budget and expenditure for the last three years, the report noted that both revenue and capital head of accounts of the government had unutilised provisions.

“It was observed that budget allocations remain unutilised every year, indicating non-achievement of the projected financial outlays in the respective years. The budget allocations were made without considering the previous years’ expenditure...” the report said, with reference to three fiscals starting 2017-18.

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Debt analysis

Increase in net debt available to the state was mainly due to increase in receipts under internal debt from Rs 40,470 crore in 2018-19 to Rs 49,784 crore in 2019-20.

Commenting on the borrowings made by the government in the 2019-20 fiscal, CAG said data showed that the state “had borrowed more than the requirement”. The report noted that open market borrowings amounted to 59% of the total fiscal liabilities of the state.

Noting that rising debt was a cause for concern, the report recommended the government to “make medium term corrections on the expenditure side to moderate committed expenditure.”

Owing to a decrease in tax revenues of the state, non-tax revenue requires significant thrust by rationalising user charges.

“Efforts need to be made for efficient enforcement of recovery of non-tax revenues and revision of the user charges,” CAG said.

The report also expressed its reservations over increase in cash balance of the state, which had increased by 57% compared to previous years.

“Maintaining idle cash balance is not prudent cash management. Hence, government needs to limit the market borrowings to its requirements,” the report added.