- 10% Quota for general category
- NITI Aayog proposes all India Judicial Service Examination
- CAG Report on government spending
- Need for Citizenship (Amendment) Bill
- Clause 6 of Assam accord : indepth analysis
- Collegium system for appointment of judges
- Fear of Executive Courts
- Tamilnadu Reservation Policy
Governance & Social Justice
- Bhasha Sangam Program : Celebration of Linguistic Diversity
- Cabinet approves revision in list of scheduled tribes of Arunachal Pradesh
- Does India need a coal commission?
- Concerns in Ayushman Bharat
- Depression at workplaces : A major health issue in India
- How to bridge Gender gap in India : Mckinsey Global Institute Report
- Government plans to rename Indian Forest Service
- IGOT Program for Competent Civil Services
- Indian Medical Council Amendment Bill 2018
- National Commission for Indian Systems of Medicine and Homoeopathy
- Government bats for National Medical Devices Promotion Council
- Parental consent for vaccination
- India Signs Agreement with OECD for PISA 2021
- Kerala’s wall of resistance
- Should an IAS officer use Social Media?
- Social media addiction
- Legal Status for SSC
- Tripal Talaq Bill 2018
- Web Wonder Women Campaign by Ministry of WCD
- West Bengal Leaves Ayushman Bharat : In-depth Analysis
- Why Asian Infrastructure Investment Bank Is Important For India
- What Is The Asia Reassurance Initiative Act
- E-Passport for Indians
- What Is G-77
- Failed Coup In Gabon
- Bagladesh Election
- Powering South Asian Integration
- ISRO’S New Station In Bhutan
- Kenya Replace Pictures Of Leaders on Coins With Animal
- Macedonia Name Change
- Why Norway Is Important For India
- Why India Need Membership Of NSG
- Pakistan Declared A Hindu Temple A Heritage Site
- Raisina Dialogue 2019
- India’s Republic Day Guest
- India To Take Over Sittwe Port Operation In Myanmar
- U.S. Mexico Border
- US Government Shutdown
- US Venezuela Crisis
- What is Angel Investment?
- Byorung Bridge
- India’s Airport Privatization Plan
- Rationalisation of GST Rates
- 1st Advance Estimates of Economic Growth by CSO
- Democracy Index 2018
- E-DRISHTI Software by Ministry of Railways
- What is GAFA tax
- Ganga Expressway to be Built in UP
- Green-Ag Project launched by India with UN FAO
- Issue of Tax Evasion under GST
- Improvements under GST Regime
- ICAT Certification for Automobilies
- What is Indian Bridge management System?
- Draft Information Technology Amendmenet Rules 2018
- Jamrani multipurpose DAM Project
- What is KALIA Scheme?
- MANDAL DAM
- Mega Merger!
- MSP for minor forest produce
- NITI Aayog suggestions on farm Economy
- India’s first vertical-lift Bridge
- Paradip Hyderabad pipeline
- Measures to address issues in Sugar industry
- Capital infusion in PSBs
- Renukaji dam
- PM Modi inaugrates Rice Research Institute
- Section 74 of the insolvency and Bankruptcy Code
- Social & Environmental Cost of Building dams
- Solar feeder Maharashtra model
- RBI Tokenisation
- Sikkim-Universal basic income
- Global Risks Report 2019
Science & Technology
- Why Beech Trees Dying
- Beat Plastic Pollution Resolve by India
- Why USA Is Killings California Sea Lions
- Carbon Tax
- China’s War On Particulate Air Pollution Is Causing More Serve Ozone Pollution
- CITES Washington Convention
- Coastal Regulation Zone
- Melting Ice Sheets And Release Of methane
- National Clean Air Programme Feature &Critical Analysis
- Oceans Are Heating Up 40% Faster Than Previous Estimates
- Revival Of Iran’s Lake Urmia
- India submitted sixth national report to Convention on Biological Diversity
- How Wild Fire Affect crop and vegetation Production
- NITI Aayog’s SDG Index
Spice of the Month
- GS 2|| Polity || Constitutional Bodies || CAG
Why in News?
- The Comptroller and Auditor General of India (CAG) presented its report on spending in Parliament.
- Off-Budget Financing: those expenditures which are not shown in the budget. Govt. has used off-budget to defer fertilizer arrears, food subsidy bills and outstanding dues of Food Corporation of India (FCI).
- Off-budget financing: Market borrowing and ways and means advances, they are not included in the parliament.
- Special banking arrangements were used to conceal the deferment of fertilizer subsidies.
- Borrowed money from National Bank for Agriculture and Rural Development (NABARD) hid the spending on irrigation.
- Railway expenditure was covered by help of moneyby Indian Railway Finance Corporation, and spending on power projects by the Power Finance Corporation.
- Fiscal risks in the long term in cases the entity that raises the funds fails to meet debt servicing.
- These off budget finance methods, give the govt. an altitude to meet its revenue and capital requirements. But they also pose a tendency of fiscal risks in the long term in case the entity that raises the funds fails.
- Transparency:The quantum of such borrowings is huge and current policy framework lacks transparent disclosures and management strategy for comprehensively managing such borrowings.
- Thus, any framework created by the government with an objective of off-budget financingshould specify the rationale and, objectives of off-budget financing and sources of fund, among others.
- Government should also disclose the details of off- budget borrowings through disclosure statements in Budget as well as in accounts.
Example of FCI:
- CAG report gave the example of Food Corporation of India (FCI).
- The difference between the cost of procurement of foodgrains and cost of providing them to fair price shops is what FCI demands from the government as subsidy.
- When the budget allocation of a financial year is not sufficient to clear all the dues of food subsidies bill raised by FCI, the dues of such subsidies are carried over to next financial year.
- It is evident that there was increase of about 350% in carried over subsidy arrears in the five years preceding 2016-17.
- But the government has passed on its own food subsidy burden on to the FCI, rather than servicing it from the budget.
- This requires financing from a number of methods including very high interest cash credit facility which increases actual cost of this subsidy substantially.
- The FCI has borrowed to pay for that burden and has also borrowed from NSSF to the tune of tens of thousands of crore to service that debt.
- In 2017-18, the FCI took loans of around Rs 65,000 crore from the NSSF.
- However, all this money should have been part of official government expenditure in the Budget.
- The objectives of the FRBM Act, 2003 was to provide for the responsibility of the Central Government in order to ensure inter-generational equity in fiscal management and long-term macro-economic stability.
- In larger extent, govt. is not able to achieve the objectives under the FRBM act.
- So, the focus of govt. should be to provide inter-generational equity. That means if govt. depends on off-budget financing, this will carry on the cost n the burden to the next financial year. This will lead to the accumulation of arriers and inter-generational equity. Govt. should focus on long-term macroeconomic stability.
- However, successive governments have resorted to methods like –
- Rolling over additional subsidy burden
- Taking back unspent amounts from ministries
- Converting certain expenditure entries to ways and means advances
- Running down the cash reserves
- In 2018-19 as well, such steps are expected as the center looks to meet an increasingly difficult fiscal deficit target of 3.3% of GDP.
- The forthcoming Union Budget should thus give the true picture of central finances.
- Fiscal Deficit Target: should focus more on revenue mobilization.
- Transparency – Any account of the govt. should be more transparent. Union Budget should show the true picture of central finances. Budget s
- The CAG also recommends that investing in the troubled and loss making PSE like air India, investing the small savings fund (NSSF) should be avoided.