State Finances Audit Report of the Comptroller and Auditor General of India for the year ended March 2019 Government of Maharashtra Report No. 1 of the year 2020 https://cag.gov.in Table of Contents Paragraph Page Preface vii Executive Summary ix CHAPTER I - FINANCES OF THE STATE GOVERNMENT Introduction 1.1 2 Summary of Fiscal Transactions in 2018-19 1.2 3 Financial Resources of the State 1.3 7 Revenue Receipts 1.4 9 Capital Receipts 1.5 19 Public Account Receipts 1.6 20 Application of Resources 1.7 21 Quality of Expenditure 1.8 32 Financial analysis of Government expenditure and investments 1.9 35 Assets and Liabilities 1.10 39 Fiscal Imbalances 1.11 46 Debt Management 1.12 50 Follow Up on Audit Reports 1.13 52 CHAPTER II - FINANCIAL MANAGEMENT AND BUDGETARY CONTROL Introduction 2.1 53 Summary of Appropriation Accounts 2.2 53 Financial Accountability and Budget Management 2.3 54 Outcome of review of selected Grants 2.4 59 Advances from Contingency Fund 2.5 62 Misclassification of Expenditure 2.6 63 Outcome of Inspection of Treasuries 2.7 64 Chapter III - FINANCIAL REPORTING Non-submission/delay in furnishing Utilisation Certificates 3.1 69 Non-submission/delay in submission of Accounts by Grantee Institutions 3.2 71 Delay in submission of Accounts/Separate Audit Reports of Autonomous 3.3 72 Bodies and placement of Audit Reports before the State Legislature Delay in finalisation of Proforma Accounts by departmentally managed 3.4 73 Commercial Undertakings Misappropriations, losses, defalcations etc. 3.5 73 Reconciliation of receipts and expenditure 3.6 75 Opaqueness in Government Accounts 3.7 75 Pendency in submission of Detailed Contingent Bills against 3.8 76 Abstract Contingent Bills iii Table of Contents No. Appendices Reference to Pages Paragraph 1.1 State Profile 79 1.2 Structure and Forms of Government Accounts 1.1 80 Fiscal Responsibility and Budgetary Management Act and 1.3 1.1 81 Rules 1.4 Outcome indicators of the State's own Fiscal Correction Path 1.1 82 Abstract of Receipts and Disbursements for the year 2018-19 as 1.5 1.2 83 compared to 2017-18 1.6 Outcome of analysis of budgetary assumptions during 2018-19 1.2.2 86 1.7 Time series data on State Government Finances 1.4 88 Details of Government investments and accumulated losses in 1.8 1.9.2 91 Government Companies/Corporations as on September 2019 Summarized financial statement of Departmentally managed 1.9 1.9.3 93 Commercial/Quasi-Commercial Undertakings Grants/Appropriations closed with excess supplementary 2.1 2.2.1 96 provisions during 2018-19 Grants/Appropriations closed with excess over provisions of 2.2 2.3.1 98 previous years requiring regularisation Grants/Appropriations closed with excess over provisions 2.3 2.3.1.1 99 during 2018-19 requiring regularisation 2.4 Sub-head wise persistent excess over provision 2.3.2 100 Rush of expenditure during the last quarter and last month of 2.5 2.3.4 102 2018-19 Grants /appropriations which closed with savings of more than 2.6 ` 10 crore each and more than 20 per cent of the total 2.3.5 104 provisions 2.7 Grants which closed with savings of ` 100 crore each and above 2.3.5 106 Grants closed with savings of more than ` 100 crore 2.8 2.3.6 109 persistently during 2014-15 to 2018-19 Unnecessary supplementary provisions ( ` 10 crore or more in 2.9 2.3.7 110 each case) Cases of surrender of funds in excess of ` 50 crore on 30 and 2.10 2.3.8 112 31 March 2019 Sub-head wise substantial saving under Grants A-09 and Y-02 2.11 2.4.2 115 during 2018-19 Surrender of entire provision under Grants A-09, Y-02 and I-05 2.12 2.4.3 116 during 2018-19 Rush of expenditure in last months of 2018-19 under Grant 2.13 2.4.4 117 Y-02 and I-05 Contingency fund sanction orders and utilisation against 2.14 2.5 118 sanction iv Table of Contents No. Appendices Reference to Pages Paragraph 2.15 Inoperative Personal Ledger Account 2.7.3 119 3.1 Department-wise breakup of outstanding utilisation certificates 3.1 120 Delay in submission of Accounts/Audit reports by Autonomous 3.2 3.3 121 Bodies Status of finalisation of Accounts and Government investments 3.3 in Departmentally managed Commercial and Quasi-Commercial 3.4 124 Undertakings Department-wise/age-wise breakup of the cases of 3.4 3.5 126 misappropriation, defalcation etc. Department-wise/category-wise details of losses to Government 3.5 3.5 127 due to theft, misappropriation/loss of Government material Details of sub-heads (schemes) booked under Minor Head 800 3.6 3.7 128 for the year 2018-19 3.7 Details of pending Detailed Contingent Bills up to 2018-19 3.8 131 4.1 Glossary of terms 4.1 132 4.2 Acronyms and Abbreviations 4.2 135 v PREFACE 1. This Report has been prepared for submission to the Governor of Maharashtra under Article 151 of the Constitution of India. 2. Chapters I and II of this Report contain audit observations on matters arising from examination of Finance Accounts and Appropriation Accounts respectively of the State Government for the year ended 31 March 2019. Information has also been obtained from the Government of Maharashtra, wherever necessary. 3. Chapter III on ‘Financial Reporting’ provides an overview and status of the State Government’s compliance with various rules, procedures and directives relating to financial reporting during the current year. 4. The Reports containing the findings of Performance Audits and audit of transactions in various Departments and observations arising out of audit of Statutory Corporations, Boards and Government Companies and the Report containing observations on Revenue Receipts are presented separately. vii EXECUTIVE SUMMARY Background This Report on the Finances of the Government of Maharashtra is being brought out with a view to objectively assess the financial performance of the State during 2018-19 and to provide the State Government and State Legislature with timely inputs, based on analysis of the financial data. In order to give a perspective to the analysis, an effort has been made to compare the achievements with the targets envisaged by the State Government in their Fiscal Responsibility and Budgetary Management (FRBM) Act, 2005 and the Budget Estimates of 2018-19. The Report Based on the audited accounts of the Government of Maharashtra for the year ended March 2019, this Report provides an analytical review of the Annual Accounts of the Government. The Report is structured in three Chapters. Chapter I is based on the audit of Finance Accounts and makes an assessment of the State’s fiscal position as on 31 March 2019. It provides an insight into trends of committed expenditure and the borrowings made by the State. Chapter II is based on audit of Appropriation Accounts and gives a grant-wise description of Appropriations voted for by the Legislature and the extent to which the allocated resources were managed by the service delivery Departments of the Government. Chapter III gives a selected insight into the State Government’s compliance to various reporting requirements and Financial Rules. The Report also compiles the data collated from various Government Departments/Organisations in support of the audit findings. Audit findings and recommendations Overview of the Finances of the State Government The State registered Revenue Surplus ( ` 11,975 crore) and Primary Surplus (` 11,006 crore) for the second consecutive year in 2018-19. During 2018-19, the State achieved all the three major fiscal indicators specified in the Fourteenth Finance Commission (FFC) Report i.e. (i) the fiscal deficit as percentage of Gross State Domestic Product (GSDP) stood at 0.87 per cent which was within the limits of 3.25 per cent recommended by FFC and State’s Medium Term Fiscal Policy Statement (MTFPS) (1.81 per cent ) (ii) the ratio of debt to GSDP at 16.42 per cent was lower than the FFC target of 23.88 per cent and MTFPS target of 16.52 per cent (iii) the ratio of interest payment to revenue receipt at 12.19 was lower than the norm prescribed by FFC (12.27) but slightly higher than the target fixed by the State’s Medium Term Fiscal Policy Statement (12.02). The revenue receipt of the State remained between nine per cent and 10.5 per cent of the GSDP during 2014-19. A slight upward surge in the ratio during 2017-18 and 2018-19 at 10 per cent and 10.5 per cent respectively was ix State Finances Audit Report for the year ended 31 March 2019 largely, a consequence of tax reforms brought in through the implementation of the Goods and Services tax (GST). The contribution of Tax Revenue in the Revenue receipt was between 67 per cent and 69 per cent during 2014-19. There was an increase in tax revenue by ` 19,504 crore (12 per cent ) during 2018-19 over the previous year due to increased collection under taxes on sales, trade etc. and GST by ` 13,120 crore (13 per cent ). The non-tax revenue during 2014-19 fluctuated between six per cent and eight per cent whereas central transfers increased from 23 per cent in 2014-15 to 27 per cent in 2018-19. The non-tax receipt relative to GSDP has shown a steady decline during 2014-19 indicating that the State needs to devise measures to enhance non-tax revenue to augment its Revenue Receipts.