The Comptroller and Auditor General (CAG) of India has pulled up the Gujarat Government for a significant fall in its tax revenues in 2017-18 and asked the authorities to ensure better compliance.

The official auditor’s report on the state’s finances for 2017-18, tabled in the Assembly here on Friday, took serious note of lower collections, saying: “Tax revenues of the state in 2017-18 stood lower by a significant margin of Rs 41,170 crore than the 14th Finance Commission projections of Rs 1,12,719 crore.”

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The CAG pointed out that against the 14th Finance Commission’s projections of a tax to GSDP ratio of 9.42 per cent, “it stood lower at 5.42 per cent.”

It asked the state to ensure better tax compliance as well as recommending that it should explore mobilizing additional resources through tax revenues.

The CAG also took note of the negligible 0.21 per cent returns the state government got on the investments it made in the state PSUs, statutory corporations and institutions during a five-year period of 2013-18 and ask the planners to evolve a dividend policy to ensure reasonable returns from its profit-making PSUs.

During financial year 2017-18, the state government made an additional investment of Rs 8,281 crore, including Rs 7,561 crore in state PSUs, Rs 593.29 crore in statutory corporations and Rs 1.47 crore in cooperative institutions.

“The average return on investment in these companies, statutory corporations, institutions during 2013-18 was 0.21 per cent, while the government paid an average interest of 7.67 per cent on its borrowings during the same period,” the CAG pointed out, and added that this needed better planning on the additional investments. It simultaneously also noted that the government had earned Rs 97.89 crore as dividend from six of the 50 profit-making state PSUs during 2017-18.

The auditor said that while the revenue expenditure increased by 13.63 per cent over the previous year, “revenue expenditure as a per cent of GSDP slightly decreased over the previous year and stood lowest at 8.94 per cent during the last five years”.

The expenditure on salaries, interest payments, pension and subsidies increased continuously from Rs 35,421 crore in 2013-14 to RS 57,039 crore in 2017-18 and this also formed the chunk of the total revenue expenditure.