CAG: Borrowed funds used for clearing liabilities in Bihar

The latest report of the Comptroller and Auditor General (CAG) of India on the Government of Bihar has detected huge borrowed funds used to discharge existing liabilities, rather than for capital formation or carrying out development activities. The report was tabled on the floor of the state legislature on Thursday.
“82.94 percent 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,” says the CAG report for the year ending March 2021.
The report also said the outstanding public debt (Rs1, 77,214.85 crore) at the end of the year has increased by Rs 29, 035 crore over the previous year. It added the revenue expenditure in 2020-21 increased by Rs13, 476 crore (10.69 percent) whereas the capital expenditure grew by Rs 5, 905 crore (47.99 percent) over the previous year.
The CAG report stated that the state recorded a fiscal deficit of Rs 29, 827 crore during the year, an increase by Rs15, 103 crore over the previous year. During 2020-21, the State suffered a revenue deficit of Rs11, 325 crore for the second time since 2004-05. The primary deficit of the state has increased from Rs 3,733 crore in 2019-20 to Rs17, 343 crore in 2020-21. The ratio of total outstanding debt to GSDP, as envisaged in mid-term fiscal policy, was within the BFRBM Act norms, said the report.
As per the report, the funds booked under capital expenditure and transferred to Major Head -8448 ranged from 50 per cent to 92 per cent during the last five years, leading to the parking of funds. An accumulated amount of Rs 28, 573.60 crore was transferred in deposit accounts as on 31 March 2021 by depicting expenditure over the years. As a result, actual capital expenditure in the state could not be ascertained.
The outstanding loans as on 31 March 2021 amounted to Rs 21, 743.77 crore which had increased by Rs 293.54 crore over the previous year, said the report. It further stated that Rs 13,459.71 crore drawn on 26,504 Abstract Contingent (AC) bills remained outstanding as of March 2021 due to non-submission of Detailed Contingent (DC) bills. This includes 1,833 AC bills amounting to ₹ 429.32 crore drawn in March 2021 alone. Non-adjustment of advances for long periods is fraught with the risk of misappropriation. Utilisation certificates (UCs) of Rs92,687.31 crore were outstanding as of 31 March 2021. High pendency of UCs is fraught with risk of misappropriation of funds and fraud, the report said.
Committed expenditure of the Government under the revenue head mainly consists of expenditure on salaries and wages (Rs21,841.65 crore), pensions (Rs19,635.15 crore) and interest payments (Rs12,484.04 crore). Total committed expenditure (Rs53,960.84 crore) constitutes a major component of revenue expenditure (38.68 percent).