According to the latest India’s Comptroller and Auditor General (CAG) report for the year 2023-24, Andhra Pradesh’s off-budget liabilities are at ₹32,903 crore. This, they said, was contained in a report that was submitted to the state assembly on Wednesday, highlighting the financial status of the state government.
The CAG defines off-budget borrowing as liabilities that, although not part of the state’s annual budget, are funded from government resources. It pertains to principals and interests that are usually catered to through grants or help extended to state government organizations.
In 2023-24, the Andhra Pradesh government came out with a new scheme of raising open market borrowings of ₹68,400 crore within limits of the FRBM Act, which had laid down a limit of ₹68,414 crore for borrowings by the State. These borrowings were supported by guarantees from the state government for various statutory corporations, government companies, cooperative societies, and financial institutions.
In case such entities fail to pay, the state takes over the obligation, and therefore, there will be legal contingent liability. While these liabilities do not show up in the state budget directly, however, they entail fiscal risks.
What the state government said was that at the end of the financial year 2023-24, it had off-budget liabilities of ₹8948.58 million; what the CAG audit found was that the off-budget liabilities were much higher and stood at ₹32,903.84 crore at the end of the fiscal year. In addition, the state government provided ₹ 10,037.31 crore for assistance and grants for off-budget borrowing and implicit subsidy worth ₹14,014.63 crore for the state’s power utilities owning to non-recovery of cost.
The CAG report has shown that the state government has shifted to off-balance sheet or off-balance methods of borrowing and revealed the implications of such contingent liabilities on the state’s economy. This challenge pushes this report as one that advocates for increased transparency.
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