CAG pulls up govt for erroneous process of IGST devolution to states

The has pulled up the union government for adopting an erroneous process of devolution of to states and short-transfer of cesses to reserve funds, which resulted in under-reporting of deficit figures for the 2017-18 and 2018-19 fiscals.

The Integrated Goods and Services Tax (IGST), which is levied on inter-state sale of goods and services, is shared between the Centre and states in the 50:50 ratio.

In its report on the union government accounts tabled in Parliament, the Comptroller and Auditor General of India (CAG) found that a sum of Rs 13,944 crore was left unapportioned and retained in the Consolidated Fund of India (CFI) in 2018-19, even though the amended Act now provides for a process for ad-hoc apportionment of

“Audit of Union Accounts for 2017-18 and 2018-19 disclosed misclassification of revenue expenditure, adoption of an erroneous process of devolution/apportionment of IGST to states, short transfer of cesses to reserve funds and non-adjustment of transactions in suspense relating to defence pensions, which have an impact on deficit calculations,” it said.

If the above get factored in calculations, deficit figures would be higher than reported in the Budget documents, the report tabled in the Lok Sabha on Monday said.

It further said the government undertook funding of revenue and capital expenditure using extra budgetary resources (EBR) in both the years.

Expenditure met from extra budgetary resources are not part of calculations of the fiscal indicators but have fiscal implications, it said, adding that a clearly laid-out conceptual framework for what constitutes extra-budgetary borrowings and of which entities was lacking.

This hampered a comprehensive measurement and disclosure of such borrowings and their impact on fiscal indicators, it said.

The report observed that there were variation in deficit figures depicted in Budget at a Glance (BAG) and Annual Financial Statements/Union Government Finance Accounts for both the years, due to netting of certain receipts and expenditure in the receipt and expenditure budgets.

Variations were also seen between the liability position disclosed in the Receipt Budget and in the Union Government Finance Accounts, it said.

The balances under National Small Savings Fund (NSSF) do not explicitly disclose the substantial accumulated deficit in the fund, which would have to be made good by the government in the future, it said.

“There is also inadequate disclosure that significant amounts were being provided from NSSF for funding revenue expenditure of the government which would have to be serviced through budgetary support,” it said.

Refunds (including interest on refunds of taxes) of Rs 1,68,702 crore and Rs 1,81,603 crore were made from gross direct tax collection in the FY 2017-18 and FY 2018-19, but no corresponding disclosure was made in the Union Government Finance accounts, it said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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