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Aug 13 – For quite some time, economics-related academic circles have warned of gross financial mismanagement and obvious statistics juggling to cover it up in West Bengal’s state finance. The latest report of the Comptroller and Auditor General (CAG) confirmed the same problem.
According to the CAG report, blatant juggling was observed in an attempt to depict a lesser revenue shortfall through misclassification of revenue transactions under capital section and non-accounting of other liabilities.
According to the CAG report, the revenue shortfall rise of 50.18 percent depicted by the state government for 2020-21, the most recent available, would have been far greater had the state not resorted to such misclassifications.
Economists such as P.K Mukhopadhyay believe that a revenue deficit rise of 50.18 percent year on year is excessive for a state government like West Bengal, which has severely limited avenues for generating its own tax revenue.
“If you study the latest CAG report carefully you will see that there had been an increase in revenue expenditure of 9.44 per cent during the fiscal under review. So, such an unbridled increase in revenue expenditure with limited avenues of state’s own tax generation is bound to result in such a high revenue deficit increase. So, again it is natural that the state government will try to project a lower revenue deficit increase figure through such misclassifications as pointed out in the CAG report,” he explained.
He stated that the only way out of this mishandling and subsequent financial juggling is to either limit revenue expenditure or expand the avenues of the state’s own tax revenue production.
“In case of West Bengal there is a requirement for both. First the state government should drastically cut down its expenditures on account of non- productive dole schemes and spending behind festivals. At the same time, the state government should frame policies for attracting big-ticket investments both in the manufacturing and services sector to open other avenues of state’s own tax revenue generally which so far is heavily dependent on the state excise component,” Mukhopadhyay explained.
Economists reviewing the recent CAG report have also expressed concern over West Bengal’s expanding outstanding obligations, which are limiting the state’s most crucial feature of asset development.
CAG stated in its report that from the fiscal year 2016 to 2020-21, the West Bengal government’s outstanding liabilities exceeded the targets.
“The state’s liabilities have been increasing year on year, and over 58.84 percent of market borrowings during the year 2020-21 were used to balance the state’s revenue account, thereby restricting asset creation in the state,” according to the CAG study.
Economists have pointed out that the highlighted CAG report has also revealed the state’s severely behind in forward planning and correct assessment of revenues and expenditure, with apparent examples of excess grant spending or substantial savings.
“What is more pathetic, as pointed out in the CAG report, is that the state government’s controlling officers have not come out with definite explanations on the reasons for such excess expenditure,” Mukhopadhyay said.
The CAG report also expressed worry over a number of superfluous extra provisions on this count.
Concerned about this grant excess, the CAG report stated that persistent excess expenditure over grants granted by the State Legislature is a violation of the Legislature’s will and should be taken seriously.
The CAG report also called into question the openness of financial reporting and obscured adequate examination of the state government’s allocative priorities and expenditure quality.