Fiscal prudence back but deficiency noted in off-budget disclosure: CAG

The central government was back on the path of fiscal consolidation in 2021-22, having “recovered ground” from the pandemic year, and its ability to sustain debt improved, the Comptroller and Auditor General (CAG) has said.

In its report on the government’s compliance in 2021-22 of the Fiscal Responsibility and Budget Management (FRBM) Act, the CAG has, however, flagged “deficiencies in disclosures” pertaining to sovereign guarantees provided to state-run firms to obtain loans, and its off-budget borrowings.

The report was presented in Parliament on Thursday. “The government guarantees given to loans raised by the public sector entities was maintained within the target ceiling of 0.5% of the GDP for the year 2021-22. We noted deficiencies in disclosures in regard to guarantees,” the CAG said in the report. “Disclosure on extra budgetary resources (being a component of the central government debt) was found deficient in respect of completeness,” it added.

The FRBM Act, 2003, was enforced in July 2004 with an objective of ensuring inter-generational equity in fiscal management and ensuring long-term macroeconomic stability. It prescribes the fiscal deficit limits in order to ensure fiscal health. It was amended four times, the latest being in 2018.