Meghalaya Govt errs on tax collection, loses over Rs 598 crore: CAG report

SHILLONG: Though the state government has blamed the NGT ban on coal mining for the loss of over Rs.600 crore revenue resulting in the current financial crunch in Meghalaya, the CAG report for 2014 revealed that the state government could have saved Rs.598.25 crore in 2013-14 in terms of realization of taxes had it taken more pro-active steps.
To a query in this regard, the Accountant General (Audit) Meghalaya, Rajesh Singh, admitted that proper measures should have been adopted to check revenue loss in 2013-14 which would have been helpful to tide over the present financial crisis.
As per the CAG report, test check of the records of taxes on sale, trade, state excise, motor vehicles, forest receipts and other non-tax receipts conducted during the year 2013-14 revealed under assessments/ short/ non-levy/ loss of revenue amounting to Rs.598.25 crore in 283 cases.
“During the year, the departments accepted under assessment/ short/ non levy/ loss of revenue of Rs.439.19 crore in 213 cases in 2013-14 and recovered only Rs.0.34 crore,” the report added.
State’s financial health poor due to over dependence
on borrowings, claims national auditor
There is concern over Meghalaya Government’s reliance on borrowed funds which has resulted in increasing fiscal liabilities of the state over the period 2009-14.
According to the findings of the CAG report for 2014, the prevalence of fiscal deficit during 2009-14 indicates “continued reliance of the state on borrowed funds, resulting in increasing fiscal liabilities over the period 2009-14, which increased by 26.28 per cent during 2013-14 compared to previous year.”
The fiscal liabilities during 2013-14 stood at 29.79 per cent of the GSDP during the current year against 27.13 per cent during 2012-13 and also exceeded the limit of total outstanding liabilities-GSDP ratio projected in Medium Term Fiscal (MTF) Plan (26.53 per cent) for the year.
Briefing reporters and highlighting various aspects of the CAG report for the year ended March 31, 2014, Accountant General (Audit) Meghalaya, Rajesh Singh, said on Friday that the average return on Meghalaya Government’s investments in statutory corporations, government companies and co-operative societies  was less than one per cent during 2009-14, whereas the government paid interest at an average rate of 6.22 to 6.61 per cent on its borrowings during the period.
Though there was an indication of improvement in the financial health of the state during 2013-14 compared to previous year, the substantial amount of fiscal liabilities accompanied by a negligible rate of return on government investments and inadequate interest cost recovery on loans and advances might lead to an unsustainable fiscal situation in medium to long term, unless suitable measures are initiated to compress the non-plan revenue expenditure and to mobilize additional resources both through the tax and non-tax sources in the ensuing years, the CAG report said.
According to the CAG, the state should make efforts to maintain revenue surplus and reduce fiscal deficit.
Recourse to borrowed funds in future should be carefully assessed and managed so that the Fiscal Liabilities-ratio can be restricted to the projection made in the Medium Term Fiscal (MTF) Plan.
The state government should also ensure better value for money in investments by identifying the companies/corporations which are endowed with low financial but high socio-economic returns and justify the use of high cost borrowed funds for non-revenue generating investments through clear and transparent guideline, the CAG observed, while it also suggested that the state government should also explore the possibility of the closure of perennially sick public sector undertakings.