Amid an ongoing row on the issue of political freebies offered to voters ahead of elections that has even drawn interventions by the Supreme Court and the Election Commission of India (ECI), the Comptroller and Auditor General (CAG) of India is learnt to be deliberating upon ways it can check the adverse economic effects of such populist measures.
The CAG, according to a report by The Indian Express, is devising parameters that will “red-flag” the burden of subsidies, off-budget borrowings, discounts and write-offs which may pose challenges to the economy of states.
Earlier this week, during the CAG’s Audit Advisory Board (AAB) meeting headed by Girish Chandra Murmu, the issue of “financial sustainability” of states had come up. The 21-member board has 10 external members.
Following the COVID-19 pandemic, arguing that most states have become “revenue deficit”, it was discussed how such states are not able to manage their expenditure from their revenue resources.
Sources cited by IE said that the top audit body is looking at the repayment liabilities of states in the next six years.
“We have seen most of the states will have a real issue — repayment. Whatever they have borrowed earlier, the repayment burden is so much that half of their budget will go, in many places, in only repaying. That is not sustainable,” a source was quoted as saying.
At the audit body meeting, there was also a suggestion to look into the range of freebies to offer. Several things like bicycles, TV, laptops, grinder, mixer, do not get reflected in the subsidy, and therefore parameters need to be developed on how to capture them, the IE source said.