State government hugely depends on Ways and Means Advances: CAG

Hyderabad: Despite the government claims that the financial health of the State is in good shape, the CAG report on Sunday pointed out that the dependency of Telangana State on Ways and Means Advances (WAs) is increasing while the contribution to the REseve4 Funds (RFs) sinking.

For example, the State government maintained the mandatory minimum daily cash balance of Rs 1.38 crore with the Reserve Bank of India (RBI) was only for 161 days during 2017- 18.

The State government is depended on Special Drawing Facility (SDF) to the tune of Rs 11,278 crore for 204 days. Similarly, it availed Rs 10,878 crore during the same financial year under Ways and Means Advances for 127 days.

That apart, it availed Rs 764 crore for seven days under Over Draft (OD) facility for maintaining the minimum balance with the RBI. In monetary terms, however, SDF, WMA and OD showed an increase of 90 per cent with the State government availing about Rs 10,834 crore in 2017-18 ad over 2016-17. This shows an increasing dependency of the government on WMA.

The interest payment on WMA, including the SDF and OD during 2017-18 was Rs 13.82 crore as against Rs 7.40 crore in 2016-17, ie., 86 per cent increase, the CAG said. On the other hand, the public auditor recommended to the State government that it must ensure that the contribution to Reserve Fund (RFs) are made annually as stipulated, to enable firm funding stream to meet the defined purpose of the funds.

These observations were made against the backdrop, as the State government is not making contributions to RFs after the 2015-16 financial year. The RFs are created for specific and defined purposes.

As per the CAG findings, the aggregate shortfall of contribution to Consolidated Sinking Fund (CSF) during the years 2016-2018 was Rs 1,163 crore. Out of this, Rs 489.96 crore and Rs 673.69 crore were contributed during the financial years 2016-17 and 2017-18, respectively.

At the same time, the Sate's liabilities during the same period rose by 6 69 per cent from Rs 97,992 crore as of March 20167 to Rs 1,65,849 crore in March 2018.

Further, the aggregate shortfall in the TS contribution to Guarantee Redemption Funds (GRF) during the years 2016-18 was Rs 282.90 crore.

The total available balance of Rs 586.65 crore in GRF as of March 2018 was only 1.46 per cent of the outstanding amount of guarantees (of Rs 41,892 crore) as against the targeted three per cent.