'Financial health of Meghalaya declining'

SHILLONG: The fiscal standing of Meghalaya viewed in terms of key parameters - revenue surplus, fiscal deficit, primary deficit - indicated deterioration in the financial health of the state during 2011-12 relative to previous four years. This was brought to light by the CAG report for year ended March 31, 2012 recently.

The report, which was tabled in the assembly by chief minister Mukul Sangma on Thursday, said during 2011-12, the state had been facing deficit in revenue. "The revenue surplus which was Rs 247.74 crore during 2010-11 turned to revenue deficit of Rs 180.34 crore attributable to the disproportionate growth of revenue expenditure (20.49 per cent) vis-a-vis revenue receipts (9.25 per cent) in 2011-12. Fiscal deficit as well as primary deficit of the state has also increased during 2011-12 as compared to previous year," the report read.

The report said salary alone during 2011-12 accounted for around 35 per cent of the revenue receipts of the state during the year. "It increased by 8.18 per cent from Rs 1485.34 crore in 2010-11 to Rs 1606.89 crore in 2011-12," it said.

"Increase in expenditure on salary was contrary to the commitment made by the state government in its 'Fiscal Policy Strategy Statement' for the year 2011-12 that efforts would be made to reduce expenditures on salaries through an objective analysis of the relevance of existing posts and abolition of posts identified as redundant," the CAG pointed out.

The CAG underscored that the state government should explore possibilities to mobilize additional resources by expanding non-tax base and rationalizing user charges. The state should also make efforts to increase tax compliance and reduce tax administration costs, the CAG said.

"Expenditure pattern of the state government needs correction in the ensuing years. The state should initiate action to restrict components of non-plan revenue expenditure. From the point of view of improving developmental expenditure, it is pertinent for the government of Meghalaya to take appropriate measures and lay emphasis on provision of development capital expenditure," the CAG emphasized.

Considering the low return on investment in statutory corporations, government companies and co-operatives, the state government should ensure better value for money in investments by identifying companies and corporations which are endowed with low financial but high socio-economic returns and justify the use of high cost borrowed funds for non-revenue generating investments through clear and transparent guideline, the report stressed.

The CAG said departments should ensure timely submission of utilization certificates for grants released for specific purposes and annual accounts of autonomous bodies. "Departmental enquires in all fraud/misappropriation cases should be expedited and internal controls strengthened to prevent such cases," the CAG recommended.