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HomeIndiaAAP cheers CAG revenue-surplus find as nod to ‘honesty’. But it wasn’t...

AAP cheers CAG revenue-surplus find as nod to ‘honesty’. But it wasn’t all rainbows & butterflies

CAG report cited huge losses incurred by 7 public sector enterprises, non-utilisation of funds meant for various schemes & pulled up public sector firms for not adhering to policies.

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New Delhi: Ask Chief Minister Arvind Kejriwal or his deputy Manish Sisodia to prove their government’s “honesty” and they are likely to point to a Comptroller and Auditor General (CAG) report that says Delhi has been a revenue surplus state since 2015 — the year the Aam Aadmi Party (AAP) first came to power with a majority.

And to some extent, they may be right. But Kejriwal and Sisodia seem to have either missed out or chosen to remain tight-lipped on concerns flagged by the national auditor in that very same report, which was tabled in the Delhi assembly last month.

Apart from highlighting huge losses incurred by seven of the Delhi government’s 18 public sector enterprises year after year, the CAG report also flagged non-utilisation of funds earmarked for various schemes in 2019-20, and pulled up Delhi’s public sector firms for not adhering to prescribed accounting policies and standards.

“The revenue surplus of NCT of Delhi in 2019-20 of Rs 7,499 crore indicates that revenue receipts of the government were sufficient to meet the revenue expenditure. Revenue surplus stood at 0.88 per cent of GSDP (gross domestic product of the state) in 2019-20 as against 0.81 per cent in 2018-19,” noted the CAG report tabled 5 July.

However, the report went on to emphasise that the Delhi government has been able to retain its revenue surplus tag largely on account of a considerable sum of its liabilities being borne by the central government. These include pensions of Delhi government employees and expenditure of the Delhi Police, which comes under the purview of the Ministry of Home Affairs (MHA).

ThePrint reached Delhi government and AAP spokespersons via text and calls for a response to the findings, but they did not comment on the matter.


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DTC accounted for lion’s share of losses

The CAG report on Delhi’s finances for the financial year that ended 31 March 2020, noted that the national capital had 18 state public sector enterprises (SPSE) as on 31 March 2020.

Of those, two — Delhi Transport Corporation (DTC) and Delhi Financial Corporation (DFC) — are statutory corporations, while the rest are government companies including Delhi State Industrial & Infrastructure Development Corporation Ltd (DSIIDC), Delhi Transco Ltd (DTL), Delhi Power Company Ltd (DPCL), and Delhi Tourism and Transportation Development Corporation Ltd (DTTDC), among others.

According to the report, a major chunk of the Delhi government’s investments in 2019-20 happened to be in the transport and power sectors.

Collectively, the 18 SPSEs recorded a turnover of Rs 9,573.56 crore in 2019-20, accounting for 1.12 per cent of Delhi’s gross state domestic product (GSDP). 

Ten of these SPSEs collectively earned Rs 1,123.10 crore in profits in 2019-2020, as against around Rs 894.74 crore the previous fiscal year, the report said. But it also found that seven SPSEs incurred losses in 2019-20, with the DTC running up a lion’s share of the losses.

“The losses incurred by these loss-incurring SPSEs increased to Rs 5,294.16 crore in 2019-20 as per their latest finalised accounts from Rs 3,859.78 crore in 2017-18 and Rs 4,386.79 crore 2018-19,” the CAG report said.

The report also noted that of the “total loss of Rs 5,294.16 crore incurred by these seven loss-incurring SPSEs during 2019-20, loss of Rs 5,280.55 crore (99.74 per cent) was contributed by Delhi Transport Corporation alone”.

The CAG report said there were three broad reasons behind the DTC’s losses: non-revision of fares since 2009, increase in maintenance cost, and pay revision of employees.

“As on 31 March 2020, net worth of Delhi Power Company Limited and Delhi Transport Corporation was (-) Rs 37,124.89 crore which was completely eroded by accumulated loss of these SPSEs,” the report stated.

Funds earmarked for schemes but not spent

Another key concern highlighted in the CAG report pertained to a trend suggesting that the Delhi government fell short of fulfilling its spending commitments in crucial areas. 

According to the report, for 2019-20, the Delhi government had initially projected spending Rs 493.13 crore on 39 schemes, eventually revising the projection to Rs 196.76 crore, but ended up not spending a single rupee on any of those schemes.

Among those schemes were the Chief Minister Advocates Welfare Scheme, a scheme for farmers’ welfare, a research grant scheme, scholarship for students from minority communities, economically weaker sections and other backward classes (OBCs), and financial assistance for Scheduled Castes (SC) and Scheduled Tribes (ST).

Part of the amount was also earmarked for upgrading anganwadi centres, setting up special courts for cases against MPs and MLAs, and a DNA testing lab using the Nirbhaya Fund.

Similarly, the CAG report stressed that the Delhi government had projected spending another Rs 2,744.61 crore in 2019-20 on 44 other schemes, but withdrew the projection wholly while filing revised outlay.

This amount was earmarked for, among other things, organising sports activities in assembly constituencies, setting up new language academies, upgrading industrial training institutes, managing shelter homes for the elderly and persons with disabilities, constructing a working women’s hostel, installing CCTV cameras in anganwadi centres, management of fisheries, and landscaping of roads.

‘Accounting policy impacted profitability’

The national auditor even pulled up some of the Delhi government’s prominent public sector firms on grounds of failure to adhere to accounting policies that may have had a significant impact on their profitability.

For instance, Pragati Power Corporation Limited (PPCL), the report found, neither adhered to its accounting policy nor followed the appropriate accounting standards (Ind AS-10) in the financial year 2019-20. This resulted in understatement of sale of energy by Rs 7.30 crore and consequent understatement of profit and other equity by Rs 5.73 crore and tax expenses by Rs 1.57 crore, according to the CAG.

Simply put, had PPCL followed the prescribed accounting standards, it would have had higher profits and therefore would have paid more tax.

Another power sector firm, Indraprastha Power Generation Company Limited (IPGCL), overstated revenue from operations by Rs 12.86 crore and consequently understated losses for the year by the same amount, the national auditor said.

Some of the other firms that were pulled up by the CAG for similar reasons include the Delhi State Industrial & Infrastructure Development Corporation Limited, Delhi SC/ST/OBC Minorities and Handicapped Financial and Development Corporation Ltd and Delhi Transco Ltd.

The CAG’s assessment was that these issues may have impacted the profitability of these public sector companies by Rs 10.67 crore and their assets and liabilities by Rs 103.16 crore.

(Edited by Amrtansh Arora)


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