Loans on govt properties routed as revenue in Punjab budget: CAG

The Punjab government is not only selling family silver to survive but is also showing loans as the state’s income. Raising serious questions over Punjab’s budgetary process, the report of Comptroller and Auditor General of India (CAG) tabled in the state assembly on Friday points out some glaring irregularities.

It says the Punjab government, in order to avoid routing borrowings through the budget, showed loans raised by the Punjab Urban Planning and Development Authority (PUDA) by mortgaging government properties as revenue receipt. “PUDA raised a loan of Rs 2,000 crore from various banks from the properties transferred to it by the government under the optimum utilisation of vacant government land (OUVGL) scheme. PUDA deposited Rs 1,000 crore in 2012-13 and the remaining Rs 1,000 crore in 2013-14 in the government account under the head -- miscellaneous government services,” it says.

It adds that this resulted in overstatement of revenue receipts in 2012-13 by Rs 1,000 crore, thereby bringing the revenue deficit down by the same amount. “In 2013-14, the state government incurred an expenditure of Rs 176 crore on PUDA under the heads of housing, urban housing and grants-in-aid. This was shown as revenue expenditure but the revenue deficit was still understated by Rs 823 crore, out of the Rs 1,000 crore deposited into the government account this year,” it says.

On being pointed out, the report says the finance department, in its reply in November 2014, said PUDA deposited the amount of Rs 2,000 crore against the government land transferred to it and it was accounted for as per the accounting system. However, the CAG has termed the reply not acceptable. “The orders issued by the department of finance directing PUDA to deposit Rs 2,000 crore in government account did not mention that the amount was against lands transferred to it. Rather, the orders clearly stated that the amount would be raised as loans by PUDA and for repayment of the loan, the state government would release funds to PUDA for onward payment to the bank concerned,” the CAG report adds.

Rs 1,800 crore for atta-dal too ‘off-budget’

Not just urban development authorities but the state’s boards and corporations are also being used to fund its populist schemes through “off-budget borrowing”. The report says the non-clearance of bills submitted by the Punjab State Civil Supplies Corporation (PUNSUP) for running the atta-dal scheme between 2007 and 2014 has piled up to Rs 1,814 crore, which shows the scheme was being funded through off-budget borrowings.

The auditor’s report says the funds directly transferred by the Centre to the state’s implementing agencies, too, do not pass the state budget or annual finance accounts. “In 2013-14, Rs 1,751 crore was directly transferred, but the budget did not present a complete picture of the funds’ flow from the Centre to the state, it says, while terming Punjab’s budgetory process as “not sound”.

How Punjab saves

The CAG report also points out how Punjab saves while it budgets its expenses! In the past five years, it says, Punjab made saving of even 100% in five cases. In case of four budgetary provisions, the “saving” was over 50%, and in 18 cases, it was more than 10%. For instance, against Rs 176 crore announced in the budget for industries, the spending was nil. Against Rs 2,075 crore announced for local government, urban development and housing, the amount spent was just Rs 275 crore! Against Rs 1,228 crore announced for power and irrigation, just Rs 399 crore was spent. “Such large savings show weak budgetary control,” the report adds.