Date:01/04/2005 URL: http://www.thehindu.com/2005/04/01/stories/2005040118760500.htm

Andhra Pradesh

CAG report points to low returns from State-owned firms

By Our Special Correspondent

HYDERABAD, MARCH 31. The negligible returns from the Government's investment in its statutory corporations and State-owned companies had resulted in an implicit subsidy of Rs.2264 crores during 1999-2004.

According to the report of the Comptroller and Auditor-General of India for the year ended March 31, 2004, which was placed in the Assembly today, the State resorted to extra budgetary resources (off budget borrowings) of Rs.568 crores during 2003-04 and the outstanding balance of all such borrowings as on March 31 last year was Rs.3310 crores.

Break-up

While the revenue receipts (Rs.26,869 crore ) during 2003-04 increased by 17 per cent over those of the previous year, the revenue expenditure (Rs.30,640 crore ) exceeded the receipts resulting in a revenue deficit of Rs.3771 crore. Nearly 75 per cent of the revenue receipts were expended on salaries, interest payments, pensions and subsidies.

It said that though the 11th Finance Commission recommended restricting the interest payments to 18 per cent of the revenue receipts, they ranged between 19 to 27 per cent of the revenue receipts during 1999-2004.

Expenditure rush

Both assets and liabilities increased by 18 per cent during 2003-04 compared to the previous year. The assets-liabilities ratio remained at 0.62 indicating that 38 per cent of the liabilities did not have an asset back-up. The total outstanding loans as on March 31,2004 stood at Rs.9418 crores and the interest received on such loans varied from 3.2 per cent to 6.1 per cent during 1999-2004. However, interest paid by Government on borrowings ranged from 10 to 12 per cent resulting in an implicit subsidy of Rs.480 crores during the period.

The fiscal liabilities (Rs.64,545 crore) stood at 2.4 times the revenue receipts and 3.7 times the State's own resources at the end of 2003-04.

While the financial rules require that expenditure should be evenly distributed throughout the year, 41 per cent of the total expenditure was spent in the last quarter of 2004 and an expenditure of Rs.7425.48 crore, constituting 22 per cent of the total expenditure was incurred in March 2004 alone, indicating rush of expenditure.