GC Murmu, Comptroller and Auditor General (CAG) | photo credit: Kamal Narang
Comptroller and Auditor General of India (CAG) Girish Chandra Murmu on Monday said that states should take measures to maintain proper accounting of subsidies, reduce fiscal deficit, address revenue deficit and keep outstanding debt at an acceptable level. .
At the annual Accountants General Conference, Mr. Murmu said that states should meet their capital expenditure, including loans and advances, from their own sources of revenue, or at least limit net debt to their capital expenditure. He added, “While we understand the importance of subsidies to help the underprivileged, such subsidies need to be transparently accounted for and we need to distinguish between free subsidies that are justified versus those that are not fiscally responsible.” ,” They said.
The CAG chief said, “States should take steps to earn adequate returns on their investments and recover the cost of the borrowed funds without resorting to indirect subsidies.” He said that in order to improve fiscal management, the Center and several state governments have been implementing the Fiscal Responsibility and Budget Management (FRBM) Act in recent years.
However, we continue to notice fiscal stability risks and financial indiscipline in many states due to off-budget borrowing, misclassification of revenue expenditure as capital expenditure and non-inclusion of state guarantees in finance accounting. These factors make qualitative and timely preparation of accounts by the CAG one of the most important responsibilities to deal with these challenges,” Mr. Murmu said.
He said that the state’s finances have undergone many changes in recent years due to the implementation of the Act, computerization of treasuries and implementation of Integrated Financial Management System (IFMS). For example, the State Accountant General has implemented the Voucher Level Computerization (VLC) system to compile accounting information at the voucher level.
He said the implementation of the Public Financial Management System (PFMS) by the central government had wide-ranging implications for state accounting as far as sanctioning of state grants, fund transfers and monitoring were concerned. “The VLC system needs to interact meaningfully with these systems in real time and seamlessly. These changes have given us an opportunity to transform our approach to stay relevant,” he said.
Organized by the Government Accounts Wing of the CAG, the Accountants General’s Conference is attended by Principal Accountants General and Accountants General to discuss issues related to the maintenance of accounts of state governments. Article 150 of the Constitution states that the accounts of the Union and the States are to be maintained in such manner as may be prescribed by the President on the advice of the CAG.
Section 10 of the Duties, Powers and Services Act also empowers the CAG to compile the accounts of the Central and State Governments. “We have been fulfilling this obligation every year by preparing the Finance and Appropriation Accounts for the State Government, which are placed before the legislature to ensure accountability and transparency of the State’s finances,” Mr. Murmu said.