CAG flays Finance Ministry for not adopting rational method for forecast

Business

oi-Staff

By Super

Published: Wednesday, August 14, 2013, 9:16 [IST]

NEW DELHI: Government's auditor CAG has criticised the Finance Ministry for continuously making "optimistic projections" on revenue collection in budget presentation even as actual collection was short of estimates year after year.

"Fluctuating gap between revised estimates/budget estimates suggest that the department did not adopt any rational method for pre-budget analysis and forecasting.

"Despite the actual collections falling short of the budget estimates year after year, the government continued to make optimistic projections during presentation of the annual budget," Comptroller and Auditor General said in its report tabled in Parliament today.

As per the audit report, the percentage variation during the last decade between budget estimates and actual collections was in the range of (-) 16.02 per cent to (+) 22.35 per cent.

The percentage variation between budget estimate and actual collection was (-)16.02 per cent in 2008-09, while it was (+) 22.35 per cent in 2005-06.

While the budget estimates in 2008-09 was Rs 1,18,930 crore, the actual receipts stood Rs 99,879 crore, the auditor said citing Finance Ministry's data.

The revised estimates to actual receipt also varied from (-) 7.52 per cent to (+) 5.43 per cent during the last decade.

While the revised budget estimates in 2008-09 was Rs 1,08,000 crore, the actual receipts stood Rs 99,879 crore, the CAG said.

The revised budget estimates in 2006-07 was Rs 81,880 crore, the actual receipts stood at Rs 86,327 crore, it said.

Even in 2011-12, the percentage variation between actual receipts and budget estimates was (-) 1.20 per cent, while the percentage variations between actual receipts and revised budget estimates was (-) 2.04 per cent.

Takru said: "If you are mismanaging your company on expectation that banks are going to pick up the tab, I think it is totally uncalled for. Or if you are expecting that banks should take a hit on the money which has been advanced to you, I dont' think it is a great expectation.

"The expectation that you don't have too take any hit at all is ridiculous. The most ridiculous is the expectation that banks should put in more money to bail you out. Its stripping the bottom of the bank," the Financial Services secretary said.

Stating that every default or business failure is not malafide, Takru said"...But its your mistake and there is no reason why we should continue to allow you to make mistakes again."

On the recent hike in short-term rates by the RBI to prop the rupee, Takru said: "At the moment, we are still watching, but let's see."

Banks which have hiked lending rates will miss out on new business, he added.

PTI