The Comptroller and Auditor General of India on Tuesday said the Centre borrowed through off-budget channels to finance capital and revenue expenditure in the 2016-’17 financial year, Mint reported. The agency, in a report tabled in Parliament, said this practice hides the true extent of fiscal and revenue deficits.
In its Fiscal Responsibility and Budget Management Act Compliance Report, the Comptroller and Auditor General said the Narendra Modi-led government underestimated its total liability by 5% and the revenue deficit by Rs 50,999 crore, The Indian Express reported. “Government may consider putting in place a policy framework for off-budget financing, which, among others, should include disclosure to Parliament,” the auditor recommended.
The auditor said the government borrowed funds from the Indian Railway Finance Corporation for railway projects, and the Power Finance Corporation for power projects. These decisions were outside the scope of the budget, it added. “Such off-budget financing is not part of calculation of the fiscal indicators despite fiscal implications,” the CAG said.
The Comptroller and Auditor General said that considering the understatement of liability, the government’s total liability at the end of the 2016-’17 financial year was Rs 76,69,545 crore, which is 50.5% of Gross Domestic Product, rather than 45.5%.
The Ministry of Finance denied there it does not have control over off-budget borrowings, pointing out that the Fiscal Responsibility and Budget Management Act was amended in 2018 to include a debt target.