The Comptroller and Auditor General (CAG) has slammed the Gujarat government for violating norms of accounting standards by showing revenue expenditure of more than Rs 1,600 crore (Rs 16 billion) as capital expenditure and thus inflating the revenue surplus in 2013-14.
The BJP government in the state violated the Indian Government Accounting Standard (IGAS)-2 and tried to show more revenue surplus (Rs 4,717 crore in 2013-14), it says.
In it's audit report for 2013-14 on the state finances tabled in Gujarat Assembly, the CAG notes that "Gujarat had a revenue deficit during 2009-11 which turned into revenue surplus during 2011-12 to 2013-14. The state had a revenue surplus of Rs 4,717 crore in 2013-14."
As per the rules, grant-in-aid and subsidies should be included in revenue expenditure. "However, the state government wrongfully booked Rs 1,633.5 crore (Rs 16.33 billion) in respect of grant-in aid and subsidies as capital expenditure. This resulted in under-statement of revenue expenditure and over-statement of the revenue surplus," the report says.
"Also in 2012-13, amounts of Rs 881.3 crore (Rs 8.81 billion) and Rs 207.27 crore (Rs 2.07 billion) were disbursed as grant-in-aid and subsidy, respectively, under various capital major heads of expenditure. This was reported in CAG report for the year ended on March 2013," the auditor has pointed out.
The state finance department had assured the CAG in December 2014 that all the departments had been instructed to follow IGAS-2 norms in preparation of budget estimates for expenditure, it adds.
The CAG also notes that revenue surplus witnessed decline over the previous year.
"In 2013-14, the state had a revenue surplus of Rs 4,717 crore (Rs 47.17 billion), a decrease of Rs 853 crore (Rs 8.53 billion) over the previous year (Rs 5,570 crore). The decrease was mainly on account of increase of only Rs 4,747 crore (6.31 per cent) in revenue receipts against increase of Rs 5,601 crore (8.04 per cent) in the revenue expenditure".
Moreover, Gujarat's fiscal deficit has also increased by Rs 1,930 crore (Rs 19.30 billion) over the previous year, the CAG points out.
"The fiscal deficit increased from Rs 15,153 crore (Rs 151.53 billion) in 2009-10 to Rs 18,422 crore (Rs 184.22 billion) in 2013-14. Fiscal deficit during the year increased by Rs 1,930 crore over the previous year.
The increase was mainly on account of increase of Rs 1,450 crore (6.83 per cent) in capital expenditure," it says.
"Increase of Rs 1,930 crore (Rs 19.30 billion) in fiscal deficit together with increase of Rs 1,171 crore (Rs 11.71 billion) in interest payment resulted in increase of Rs 759 crore (Rs 7.59 billion) in primary deficit from Rs 4,331 crore (Rs 43.31 billion) in 2012-13 to Rs 5,090 crore (Rs 50.90 billion) in 2013-14."
The government, in a statement issued on Thursday, said it had followed the direction of the 13th Finance Commission and restricted the revenue deficit to 2.38 per cent of the Gross Domestic Product and earned praise from the CAG.
The Finance Commission wants deficit to be not more than three per cent of state's GDP, it said.
