TS loan to repay previous loans: CAG

Hyderabad: The Comptroller and Auditor General (CAG) has fired the Telangana government for the misuse of loans. The state finance audit report for 2021 revealed that 76% of borrowings from financial institutions and other bodies were used for the repayment of previous borrowings. The CAG also highlighted the growing reliance of the state government on Ways and Means Advanced (WMA).

The report pointed out that the borrowed funds should have been used for capital fund creation and development activities. Using borrowed funds to meet current expenses and to pay interest on outstanding loans is unsustainable, the CAG report observed. Of the borrowings of Rs 1.85 lakh, the report states that 76.53% was used for repayment of previous borrowings, net capital expenditure (8.60%), net loans and advances (5.84% ) and the expense portion of the revenue has been satisfied. on available net borrowings which amount to 9.03 per cent.

The average interest rate on outstanding public debt has fallen slightly over the past four years, from 8.20% to 7.89%. However, this must be seen in the context that the state government has obtained loans with very long maturities. Also, there was no evidence on file to show that the government did a financial impact study for long-term borrowing with slightly lower interest rates.

The CAG said total borrowing has more than doubled in the past five years. Although no revenue expenditures were covered by borrowed funds until 2018-19, in 2019-20 and 2020-2021 revenue expenditures were covered by available net borrowings.

The report revealed that interest payments on WMA drawdown (including Overdraft (OD) and Special Draw Facility (SDF) during 2020-21 were Rs 71.28 crore compared to Rs 29.19 crore of Rs, which was a significant increase of 144% in one.Due to Covid in 2021, the number of days the government was dependent on the three advances SDF, WMA and OD was 158 days, which was also much higher than the previous year (8 days).Advances taken during the year were Rs 69,453 crore which was considerably higher than the previous year.

Comments are closed.