There was deterioration in Bihar's fiscal position in terms of trends in 2009-2010 compared to the last two years, a report fo the comptroller and auditor general said.
Though the state maintained a revenue surplus during these years and had already achieved the 12th Finance Commission's recommendation of eliminating revenue deficit, there was a decrease in the revenue surplus during the period under review, said the CAG report on the state's finances for the year ended March 31, 2010.
The report was tabled by deputy chief minister Sushil Kumar Modi
in the state assembly.
The report, however, said the fiscal deficit, which was well within 3% of the gross state domestic product (GSDP), increased to 3.4% during the year, which too was within the revised recommendation of 3.5%.
It suggested the need to reduce non-plan expenditure as the revenue expenditure was 80% of the total expenditure, of which 74% was under the non-plan head, which included expenditure on salaries, pension payments, interest liabilities and subsidies, which constituted 77% of non-plan revenue expenditure.
A CAG review showed that the average return on the government's investments in statutory corporations, government companies, cooperative banks and societies varied between 0.24 and 0.38% in the last three years.
The government paid an average interest on borrowings at rates ranging from 6.48% to 7.93%, an unsustainable proposition.
The report suggested that the state government should, therefore, initiate steps to seek better value for money in its investments.
Otherwise the high cost of borrowed funds invested in projects with low financial returns would continue to strain the economy.
Increasing fiscal liabilities accompanied by negligible rates of return on government investment and inadequate interest cost recovery on loans and advances might result in a situation of unsustainable debt in the medium to long term, unless suitable measures were initiated to reduce the non-plan revenue expenditure and mobilise additional resources, through tax and non-tax sources.
The report said that during 2009-10, there was an overall savings of Rs10,546 crore, which was a result of the total savings of Rs10,644 crore being offset by excess expenditure of Rs98 crore.
This excess expenditure required regularisation under Article 205 of Constitution, it said.
Audit scrutiny revealed instances where amounts surrendered were in excess of actual savings, indicating lack of or inadequate budgetary control.
As against savings of Rs462 crore in eight cases, savings of Rs6,063 crore were surrendered on the last two working days of March 2010.
Excess expenditure of Rs7,081 crore was pending regularisation from 1977 to 2009 and there was cent per cent surrender of funds amounting to Rs522 crore in 69 schemes.
Hence, it is essential that the state government strengthen its budgetary controls to avoid such deficiencies in financial management.
The report said there were also instances of inadequate provision of funds and unnecessary/excessive re-appropriations.
A rush of expenditure in the last month of financial year 2009-10 under 18 major heads amounted to 67% of the total expenditure, it said.
The CAG stressed that the state government's compliance with various rules, procedures and directives was not satisfactory and the government provided grants-in-aid to various bodies and institutions without ensuring proper utilisation for the intended purposes.
It recommended that to improve accountability and transparency, grants should not be provided to institutions which fail to submit utilisation certificates within the stipulated time.
A huge number of pending DC bills was another major issue before the state government and strong measures were needed to ensure their timely submission and for effective steps to settle all outstanding DC bills.
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