Window To Real Gujarat #6: ‘Model’ Gujarat Govt. Finances Are In A Mess, Debt Is At All Time High

The Gujarat State govt. has been controlled by BJP for the past 19 years and it has been held up as a model of good governance. But a look at its finances shows deep mismanagement, violations of rules, ill conceived spending, ever increasing debt and a general picture of disarray. Review of seven years of state budgets – available in successive CAG reports – shows that nearly Rs.60,000 crore of allocated funds remained unspent cumulatively, about Rs.357 crore were spent without any provision being made in budgets, thousands of crore rupees were spent in the last month of the financial year, annual accounts of 126 govt. bodies and 41 autonomous bodies under the state govt. were not submitted or audited, nearly Rs.10,000 crore worth of utilization certificates were pending every year end.

This playing fast and loose with public money should be seen in the context of the fact that in 2014-15, the state govt. was left with a revenue surplus, that is, the govt. could not spend all the money that it has raised through various tax or non-tax measures. This ‘saving’ may please neo-liberal economists who advocate less govt. spending, but given the dismal record of Gujarat govt. in reducing poverty, making education or healthcare accessible to all or even creating job opportunities, it is a shocking state of affairs.

But here is the kicker: despite all this, the state govt. has been on a loan taking spree to raise resources. Its debt has zoomed up by five times in the past 15 years to reach Rs.2.48 lakh crore in the Budget estimates of the current financial year (2017-18), according to latest RBI compilation. This works out to a per person debt of about Rs.37,749, the fourth highest among 19 major states.

CAG reports for successive years repeatedly emphasise that the state govt. does not seem to have put due thought on how much to allocate for what. This arbitrary allocation and spending is what causes Rs.59,836 crore worth of funds going unspent and Rs.357 crore spending on heads that were not even passed in the Budgets over the past seven years. Some of the departments that show ‘savings’ or unspent money, are important ones like education and agriculture. It may be recalled that Gujarat has a very sad record in education with school students performing low in the National Achievement Survey conducted by MHRD and a low enrolment ratio in higher education.

RBI data shows that in 2014-15, development expenditure in Gujarat made up only 8.9% of the state’s GSDP compared to an all state average of 12.5%. This put Gujarat at a lowly rank of 25 out of 28 states in development spending. For social sector expenditure (education, health, etc.) Gujarat ranked 26 out of 28 states with just 5.6% of GSDP being spent in this category in 2014-15.

Gujarat also had a huge poverty rate of nearly 17% in 2011-12, the last year when official computation of poverty was done. This is a level that is worked out with a ludicrously low poverty line as defined by the then Planning Commission. Yet the ‘model’ govt. could not spend more money to alleviate poverty.

Not spending allocated money even while neglecting such basic problems as education, health and poverty seems to have been the modus operandi for Modi when he was chief minister of Gujarat.

 That the state govt. was not serious about setting its finances right is clearly shown by the fact that every year in the seven years reviewed by CAG there were 140 or more cases of misappropriation, defalcation etc. of govt. funds amounting to Rs.8-9 crore. Obviously, unscrupulous elements within the govt. were involved in these crimes.

Another area of neglect was non-pursual and indifference towards getting utilization certificates amounting to as much as Rs.9000 crore year after year. This means that money was being doled out to various agencies or private contractors and no accounting was done. Similar was the laxity shown towards govt. bodies and autonomous bodies.

All this shows that the so called model govt., a favorite of BJP and a ‘model’ for the whole country, was actually steeped in rampant mismanagement and neglect, with great possibility for misappropriation of public money. Hardly a model for the rest of the country and surely a model that should be got rid of by Gujarat’s suffering people!