Tuesday, July 29, 2014

CAG punches holes in Modi's Gujarat model

Notwithstanding tall development and financial management claims of the state, the Comptroller and Auditor General of India (CAG)'s five audit reports on the last leg of Narendra Modi's rule as the Gujarat Chief Minister after a 12-year stint has fished out in all disputed transactions worth Rs.25,000 crore that points to fiscal profligacy and rising debt burden.
Among several other things, the CAG has questioned the Gujarat government's claim of Rs.5,570 crore revenue surplus during 2012-13 and described it as overstated. The CAG reports were tabled on the last day of the State's budget session in the assembly on Friday with the entire Opposition being suspended from the House before it staged a walkout.
The CAG report states: "The Gujarat government wrongly booked expenditure of Rs.881 crore on account of grant-in-aid and expenditure of Rs.202.27 crore on subsidy resulting in overstatement of revenue surplus to the tune of Rs.1088.57 crore". The report says that cheques worth Rs.2,667 crore were not encashed at all as on March 31, 2013 that led to overstatement of expenditure.
Mounting debt
Similarly, the auditing watchdog points out that the State's fiscal liability (or debt burden) which was around Rs.50,000 crore during the BJP- ruled Keshubhai Patel regime rose astronomically after the Narendra Modi government took charge.
"It rose to Rs.1.05 lakh crore in 2008- 2009 and is Rs.1.66 lakh crore in 2012- 13," according to the CAG. The auditor warns that increasing fiscal liabilities may lead to an unsustainable debt in the medium to long term. Coming down heavily on the State's management of its finances, the CAG has also brought to light irregularities in the form of non- or short levy, short realisation, underassessment of loss of revenue, incorrect computation, concealment and suppression of turnover worth Rs.5,411 crore over the last five years.
"Even after being pointed out, it (government) accepted only 2.93 per cent of the observation and made a recovery of only 0.17 per cent. Seven years after introduction of Value Added Tax (VAT) in 2006 some systems still remain to be finalised in the absence of which the input tax credit(ITC) availed by dealers of commodities cannot be authenticated," the CAG reports say. The arrears in collection of VAT, the report states, doubled from Rs.8,352 crore in 2007 to Rs.16,566 crore by the close of financial year 2012.
Notwithstanding allegations by the Gujarat's Modi government that the former Congress- led Union government had given a short- shrift to the state in issue of grants and other issues, the CAG has found that huge grants went simply unused. The central audit watchdog says that grants of over Rs.13,049 crore remained unutilised during financial years 1999- 2000 and 2011- 2012.
The state government's big claims of magical turnaround of public sector undertakings have also come under the scanner of the CAG that has pointed to losses of a whopping Rs.4,892 crore. " It was controllable," rues the CAG.
The reality check
CAG has questioned the Gujarat govt's claim of Rs.5,570 crore revenue surplus during 2012- 13 and described it as overstated
The Gujarat government wrongly booked expenditure of Rs.881 crore on account of grant- in- aid
The report says that cheques worth Rs.2,667 crore were not encashed at all as on March 31, 2013 that led to overstatement of expenditure
Gujarat's debt burden, which was around Rs.50,000 cr during the Keshubhai Patel regime, rose astronomically after the Modi took charge
Gujarat Maritime Board and Gujarat Urja Vikas Nigam gave undue benefits to Reliance Petroleum worth Rs.649.29 crore & Essar Power of Rs.587.50 crore
So, actually, it was not Acche Din in Gujarat but cooked books, just like the Satyam Scam. Unfortunately while Raju went to jail, Modi became the Prime Minister.
Because Raju was a businessman and Modi a politician.
The sad part of Indian judicial system is that very few politicians are sent to jail when actually they are the originators of most scams.

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