CAG K Sanjay Murthy Consults with 16th Finance Commission Chairman Arvind Panagariya on Public Finance Issues

On Wednesday, Comptroller and Auditor General of India, K Sanjay Murthy, engaged in discussions with Arvind Panagariya, Chairman of the 16th Finance Commission. They explored various public finance aspects, including untapped revenue sources and GST administration. This high-level meeting is part of the commission's ongoing evaluation of the financial landscape at both central and state levels, according to a release from the CAG office.

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The discussions primarily revolved around three main areas: Union and state finances, local bodies, and Public Sector Enterprises (PSEs). The CAG audits these entities and maintains state accounts. The CAG shared audit findings highlighting fiscal challenges, such as the gap between expenditure and non-debt receipts for both the Union and states combined.

Focus on Revenue Sources

The CAG highlighted untapped revenue sources like stamp duty, registration fees, and state excise collections. Recommendations include updating market value guidelines regularly and improving property classification. The adoption of modern technology, such as sensor-based systems and QR codes, was suggested to reduce revenue leakages and enhance data accuracy.

In terms of Goods and Services Tax (GST) administration, the CAG proposed reforms to integrate unregistered goods and service providers into the GST framework. This would be achieved through automated data collection and real-time information systems. These measures aim to streamline tax collection and ensure accurate inter-state tax flow apportionment.

Standardising Accounting Practices

The need for standardised accounting practices across all government tiers was emphasised by the CAG. This would ensure transparent and readily available comparable fiscal information. The discussions also addressed financial management issues within local bodies. Concerns included incomplete devolution of functions, reliance on Central and state grants, and low own-source revenue levels.

The interaction with the 16th Finance Commission offered a comprehensive plan for enhancing fiscal transparency, boosting revenue performance, and ensuring robust financial management across all government levels. The CAG stressed regular reporting of Off Budget Borrowings, meeting FRBM targets, and considering post-audit liabilities in reports.

Key concerns were raised about declining State Own Tax Revenue (SOTR) buoyancy in states and varying SOTR and Non-Tax Revenue levels among states. The CAG's presentation underscored these issues while suggesting solutions to improve fiscal health.

This consultation is crucial for assessing the financial landscape of both the Centre and states. It aims to address fiscal challenges effectively while exploring potential revenue sources to strengthen financial management across all government levels.