Government’s Public Account Liabilities May Be Understated, Says CAG
The manner in which the Government of India accounts for its public account liabilities may be leading to under-reporting, according to Comptroller and Auditor General of India’s report on the Union Government’s accounts for 2018-19.
India’s Public Account Liabilities—that include its obligations as a banker or trustee for accepting small savings funds not secured by the Consolidated Fund of India—were reported at Rs 8.82 lakh crore as on March 31, 2019.
The computation of these liabilities changed in 1999-2000. Since then Public Account liabilities have excluded the amount from small savings funds that is invested in special state government securities and losses incurred in National Small Savings Fund operations, the report said. So, the Public Accounts liabilities do not include liabilities of Rs 8.16 lakh crore in NSSF, Post Office Life Insurance Fund and Rural Post Office Life Insurance Fund, that have been invested in special state government securities, in government undertakings, and Post Office Insurance Funds.
Should this amount be added back in, the government’s public account liabilities will rise to Rs 18.12 lakh crore as on March 2019, the CAG report said.
The report added that this information is disclosed in footnotes rather than the body of the financial accounts.
External Debt Violated FRBM Act
The government’s reported external debt was also lower by Rs 2.04 lakh crore, the report said. This is because debt was converted at a historical rate of exchange, the report said. External debt at current rate of exchange, as on March 2019, is featured as a footnote.
The Fiscal Responsibility and Budget Management Act, 2003 states definition of central government debt includes external debt valued at current exchange rates, the report said.