For recapitalization of PSBs, the government provided ₹80,000 crore in 2017-18 and ₹1.06 lakh crore in 2018-19 respectively.
The CAG in the Expenditure Budget netted the above expenditure on recapitalization of Public Sector Banks against the receipts from the issue of particular securities, whereas in the Receipts Budget, the receipts from the securities have been netted against the expenditure on recapitalisation.
It said that during the two financial years, the government had raised funds for these investments by issuing non-transferable special securities to the same public sector banks.
According to the CAG, the finance ministry had said that bank recapitalization was not financially neutral, but cash neutral, as the issue of securities would be reflected in the total government debt and the coupon payments for particular securities when reflected in the deficit of the respective bank. Year.
The concept of recapitalization bonds was first introduced in 2017. Earlier, capital inflows to the bank by the government were to be done through cash outgo from the Consolidated Fund. India Fiscal pressure led. In 2017, the government had introduced recap bonds.
Under this, the government issues recapitalization bonds to a public sector bank that is in need of capital. In return, banks subscribe to the bond against which the government receives money. The money received now goes as equity capital of the bank. So the government does not have to pay anything out of its own pocket.
The National Auditor also pointed out deficits in the operations of the National Small Savings Fund (NSSF), which includes all collections of small savings schemes.
“The balance under NSSF clearly does not disclose the substantial accumulated deficit in the fund, which will have to be met by the government in future. It is also insufficient disclosure that a significant amount was being provided from NSSF to finance expenditure The government, which will have to be serviced through budgetary support, also raised concerns over inadequacies in disclosure under FRBM rules.
The CAG pulled up the central government for adopting an erroneous process of devolution of Integrated Goods and Services Tax to states and short devolution of cesses to reserve funds, resulting in deficit figures for 2017-18 and 2018-19. Under reporting. fiscal. IGST, which is levied on inter-state sale of goods and services, is shared in the ratio of 50:50 between the Center and the states.
In its report on Central Government Accounts tabled in Parliament, the Comptroller and Auditor General (CAG) of India found that ₹13,944 crore in 2018-19 was unamended and retained in the Consolidated Fund of India (CFI), even though The amended IGST Act now provides a procedure for ad-hoc apportionment of IGST.