CAG report for 1st pandemic year flags Bihar’s outstanding debt - Hindustan Times
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CAG report for 1st pandemic year flags Bihar’s outstanding debt

By, Patna
Jun 30, 2022 09:27 PM IST

The report, tabled in the Bihar Legislature on Friday, the last day of the monsoon session, says that utilisation certificates (UCs) of ₹ 92,687.31 crore were outstanding as on March 31, 2021.

A report by Comptroller and Auditor General (CAG) of India on Bihar’s finances for the fiscal 2020-21, which coincided with the first wave of Covid-19 pandemic and led to a lot of restrictions, has flagged the state’s outstanding debt and high pendency of utilisation certificates for funds, saying the latter “is fraught with risk of misappropriation of fund and fraud”.

ihar minister Shravan Kumar honours several MLAs during Monsoon Session at Bihar Assembly on Thursday. (Santosh Kumar/HT Photo)
ihar minister Shravan Kumar honours several MLAs during Monsoon Session at Bihar Assembly on Thursday. (Santosh Kumar/HT Photo)

The report, tabled in the Bihar Legislature on Friday, the last day of the monsoon session, says that utilisation certificates (UCs) of 92,687.31 crore were outstanding as on March 31, 2021. “High pendency of UCs is fraught with risk of misappropriation of fund and fraud,” it says.

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According to the report, 82.94% of the borrowed funds were used for discharging existing liabilities during 2020-21 and could not be used for capital formation/development activities of the State.

The state, according to the report, recorded a fiscal deficit of 29,827 crore during the fiscal 2020-21, an increase of 15,103 crore over the previous year. During 2020-21, the state suffered a revenue deficit of 11,325 crore for the second time since 2004-05, it adds.

Outstanding public debt ( 1,77,214.85 crore) at the end of the year increased by 29,035 crore over the previous year. Outstanding debt is getting closer to the size of the budget, as in 2020-21 total expenditure of state government was 165696 crore, the report says.

A positive sign is that the state witnessed an increase of revenue receipts by 3,936 crore (3.17%) in 2020-21 over the previous year, though revenue expenditure in 2020-21 increased by 13,476 crore (10.69 %) over the previous year and capital expenditure in 2020-21 increased by 5,905 crore (47.99 %) over the previous year.

Earlier, data of the union ministry of statistics and programme implementation (MOSPI) had shown positive growth rate of 2.5% in Bihar’s gross state domestic product (GSDP) during 2020-21, the period during which the Indian economy shrank by 7.3% under the impact of Cocid-19 pandemic.

Sudhanshu Kumar, economist & associate professor, Centre for Economic Policy and Public Finance (CEPPF), Patna, said the report corresponds to the year affected by the Covid-19 pandemic, which severely affected the finances of many of the state governments across the country.

“Although the stress is visible on the government finances through the audited numbers, the overall management of the state finances in Bihar is sustainable for the given level of expenditure. The state government could manage a higher level of expenditure with the help of transfers from the central government and the borrowings. Increasing outstanding debt leads to increase in interest payments, and the cost of borrowing is expected to increase further in the coming time with the monetary policy decision of increasing policy interest rates. The interest payments are part of the revenue account, which was in deficit during the year. The state has limited means to generate revenue from own sources, and therefore, further significant jump in the government expenditure requires special fiscal assistance from the central government,” he said.

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  • ABOUT THE AUTHOR
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    Arun Kumar is Senior Assistant Editor with Hindustan Times. He has spent two-and-half decades covering Bihar, including politics, educational and social issues.

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