1.

1 Profile of the State

Rajasthan with a geographical area of 3.42 lakh square kilometers is the largest state in
the country. It is situated in the north-western part of the country and is surrounded by
the states of Punjab, Haryana and Uttar Pradesh in the north and north-east, Madhya
Pradesh in the south-east and Gujarat in the south-west. It also has a long international
frontier with Pakistan. The state has varied climatic conditions ranging from semi-arid
to arid. Administratively, it is divided into 7 divisions and 33 districts.
The key indicators of the State are given in Table 1.1 and Appendix 1.1.

Table 1.1: Key indicators of the State

Indicators Year Unit Rajasthan India

Geographical Area* 2011 Lakh Sq. Km. 3.42 32.87
Population* 2011 Crore 6.85 121.09
Decadal Growth Rate* 2001-2011 Percentage 21.3 17.7
Population Density* 2011 Population per Sq. Km. 200 382
Urban Population to total 2011 Percentage 24.9 31.1
population*
Sex Ratio* 2011 Females per 1,000 Males 928 943
Literacy Rate* 2011 Percentage 66.1 73.0
Per Capita Income* 2019-20 in ₹ 1,18,159 1,35,050
Infant Mortality Rate# 2017 Per 1,000 live births 38 33
Life Expectancy at birth# 2013-2017 Years 68.5 69.0
Population Below Poverty 2011-12 Percentage 14.7 21.9
Line (BPL)#
* Economic Review 2019-20, Government of Rajasthan (GoR).
# Economic Survey 2019-20, Government of India (GoI).
It is evident from the above table that the percentage of population below the poverty
line was 14.7 per cent which was less than the All India average of 21.9 per cent. The
literacy rate was 6.9 percentage points below the All India average of 73 per cent.
During 2019-20, per capita income of the State stood at ` 1,18,159, lower than the All
India per capita income of ` 1,35,050.

1.1.1 Gross State Domestic Product of Rajasthan

Gross State Domestic Product (GSDP) is the value of all the goods and services
produced within the boundaries of the State in a given period of time. Growth of GSDP
is an important indicator of the State’s economy, as it denotes the extent of changes in
the level of economic development of the State over a period of time.

The trends in the annual growth rate of the State's GSDP as compared to National Gross
Domestic Product (GDP) at current prices are indicated in Table 1.2.

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Table 1.2: Trends in GSDP compared to the national GDP at current prices
(₹ in crore)
Year 2015-16 2016-17 2017-18 2018-19 2019-20
National GDP (2011-12 1,37,71,874 1,53,62,386 1,70,95,005 1,90,10,164# 2,04,42,233##
Series)
Growth rate of GDP over 10.46 11.55 11.28 11.20 7.53
previous year (in per cent)
State’s GSDP (2011-12 6,81,482 7,60,750 8,35,170Ʃ 9,42,586£ 10,20,989##
Series)
Growth rate of GSDP over 10.69 11.63 9.78 12.86 8.32
previous year (in per cent)
Source: GoI’s Economic Survey (2019-20) and Economic Review (2019-20) by Directorate of
Economics and Statistics, GoR.
# Provisional Estimate, ## Advance Estimate, Ʃ Revised Estimate-III, £ Revised Estimate-I

As can be seen from the table above, during 2015-16, 2016-17, 2018-19 and 2019-20,
the GSDP of Rajasthan grew at a higher rate in comparison to the national GDP growth
rate. However, during 2019-20, state’s GSDP registered the lowest growth rate in five
years.

Change in sectoral contribution to GSVA at current prices (2015-16 to 2019-20)

Chart 1.1 reveals that during the five-year period from 2015-16 to 2019-20, there has
been a significant decrease in the relative share of Industries in Gross State Value
Added (GSVA), reducing from 30.96 per cent in 2015-16 to 27.81 per cent in 2019-20.
An increase was witnessed in the Services sector, with a marginal decline in the relative
share of Agriculture sector.

Chart 1.1: Change in sectoral contribution to GSVA at current prices (2015-16 and 2019-20)

50.00%

40.00%
46.63%
42.96%

30.00%
30.96%

27.81%

20.00%
25.56%
26.08%

10.00%

0.00%
Agriculture Industries Services
2015-16 2019-20 (AE)

Source: Directorate of Economics and Statistics, GoR

Sectoral growth in GSVA at current prices

During 2019-20, there was a decline in the growth rate of Industry and Service sectors
in comparison with the previous year. However, Agriculture sector growth rate
increased over the previous year as can be seen from Chart 1.2.

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Chart 1.2: Sectoral growth in GSVA at current prices (2015-16 to 2019-20)

25
20.63
20
(In per cent) 17.04
15 13.53
10.57 11.22 11.31 10.45
9.64
10 10.11 10.09
9.57 6.83
3.03 7.72
5
3.64
0
2015-16 2016-17 2017-18 2018-19 2019-20
Agriculture 9.57 20.63 3.03 7.72 10.09
Industry 10.11 6.83 9.64 11.31 3.64
Service 10.57 11.22 13.53 17.04 10.45

Agriculture Industry Service

1.2 Basis and Approach to State Finances Audit Report

In terms of Article 151 (2) of the Constitution of India, the reports of the Comptroller
and Auditor General of India (CAG) relating to the accounts of a State are to be
submitted to the Governor of the State, who shall cause them to be laid before the
Legislature of the State.

Principal Accountant General (Accounts & Entitlement) prepares the Finance Accounts
and Appropriation Accounts of the State annually, from the vouchers, challans and
initial and subsidiary accounts rendered by the treasuries, offices and departments
responsible for keeping of such accounts functioning under the control of the State
Government and the statements received from the Reserve Bank of India. These
accounts are audited independently by the Accountant General (Audit-I), and certified
by the CAG.

Finance Accounts and Appropriation Accounts of the State for the year 2019-20
constitute the core data for this report. Other sources include the following:
 Budget of the State for the year 2019-20– both for assessing the fiscal parameters
and allocative priorities vis-à-vis projections, as well as for evaluating the
effectiveness of its implementation and compliance with the relevant rules and
prescribed procedures;
 Results of audit carried out by the Office of the Accountant General (Audit-I),
Rajasthan at the State Government as well as at the field level during the year;
 Other data with Departmental Authorities and Treasuries (accounting as well as
IFMS);
 GSDP data and other State related statistics from the Directorate of Economics
and Statistics, GoR and
 Various audit reports of the CAG of India prepared during 2014-20.

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The analysis is also carried out in the context of recommendations of the XIV Finance
Commission (FC), State Financial Responsibility and Budget Management Act, best
practices and guidelines of the Government of India.

1.3 Report Structure

The SFAR is structured into the following four Chapters:

Chapter - 1 Overview
This Chapter describes the basis and approach of the Report,
provides an overview of the structure of government accounts,
budgetary processes, macro analysis of key indices for the State’s
fiscal position including the deficit/surplus.
Chapter - II Finances of the State
This chapter provides a broad perspective of the finances of the
State, analyses the critical changes in major fiscal aggregates
relative to the previous year, overall trends during the period from
2015-16 to 2019-20, debt profile of the State and key Public
Account transactions, based on the Finance Accounts of the State.
Chapter - III Budgetary Management
This chapter is based on the Appropriation Accounts of the State
and reviews the appropriations and allocative priorities of the State
Government and reports on deviations from Constitutional
provisions relating to budgetary management.
Chapter - IV Quality of Accounts & Financial Reporting Practices
This chapter comments on the quality of accounts rendered by
various authorities of the State Government and issues of non-
compliance with prescribed financial rules and regulations by
various departmental officials of the State Government.

1.4 Overview of Government Accounts Structure and Budgetary Processes

The Accounts of the State Government are kept in three parts:

1. Consolidated Fund of the State (Article 266(1) of the Constitution of India)

This Fund comprises all revenues received by the State Government, all loans raised by
the State Government (market loans, bonds, loans from the Central Government, loans
from Financial Institutions, Special Securities issued to National Small Savings Fund,
etc.), Ways and Means advances extended by the Reserve Bank of India and all moneys
received by the State Government as repayment of loans. No moneys can be
appropriated from this Fund except in accordance with law and for the purposes and in
the manner provided by the Constitution of India. Certain categories of expenditure
(e.g. salaries of Constitutional authorities, loan repayments etc.), constitute a charge on
the Consolidated Fund of the State (Charged expenditure) and are not subject to vote
by the Legislature. All other expenditure (Voted expenditure) is voted by the
Legislature.

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2. Contingency Fund of the State (Article 267(2) of the Constitution of India)

This Fund is in the nature of an imprest which is established by the State Legislature by
law and is placed at the disposal of the Governor to enable advances to be made for
meeting unforeseen expenditure pending authorisation of such expenditure by the State
Legislature. The fund is recouped by debiting the expenditure to the concerned
functional major head relating to the Consolidated Fund of the State.

3. Public Accounts of the State (Article 266(2) of the Constitution of India)

Apart from above, all other public moneys received by or on behalf of the Government,
where the Government acts as a banker or trustee, are credited to the Public Account.
The Public Account includes repayables like Small Savings and Provident Funds,
Deposits (bearing interest and not bearing interest), Advances, Reserve Funds (bearing
interest and not bearing interest), Remittances and Suspense heads (both of which are
transitory heads, pending final booking). The net cash balance available with the
Government is also included under the Public Account. The Public Account is not
subject to the vote of the Legislature.
There is a constitutional requirement in India (Article 202) to present before the House
or Houses of the Legislature of the State, a statement of estimated receipts and
expenditures of the government in respect of every financial year. This ‘Annual
Financial Statement’ constitutes the main budget document. Further, the budget must
distinguish expenditure on the revenue account from other expenditures.
Revenue receipts consist of tax revenue, non-tax revenue, share of Union Taxes/
Duties, and grants from Government of India.
Revenue expenditure consists of all those expenditures of the government which do
not result in creation of physical or financial assets. It relates to those expenses incurred
for the normal functioning of the government departments and various services, interest
payments on debt incurred by the government, and grants given to various institutions
(even though some of the grants may be meant for creation of assets).
The Capital receipts consist of:
 Debt receipts: Market Loans, Bonds, Loans from financial institutions, Net
transaction under Ways and Means Advances, Loans and Advances from Central
Government, etc.;
 Non-debt receipts: Proceeds from disinvestment, Recoveries of loans and
advances;
Capital Expenditure includes expenditure on the acquisition of land, building,
machinery, equipment, investment in shares, and loans and advances by the government
to PSUs and other parties.
At present, we have an accounting classification system in government that is both
functional and economic.
Attribute of transaction Classification
Standardized Function- Education, Major Head under Grants (4-digit)
in LMMH by Health, etc./Department
CGA Sub-Function Sub-Major head (2-digit)
Programme Minor Head (3-digit)

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Attribute of transaction Classification

Flexibility Scheme Sub-Head (2-digit)
left for States Sub scheme Detailed Head (2-digit)
Economic nature/ Activity Object Head-salary, minor works, etc. (2-digit)

The functional classification lets us know the department, function, scheme or

programme and object of the expenditure. Economic classification helps organize these
payments as revenue, capital, debt, etc. Economic classification is achieved by the
numbering logic embedded in the first digit of 4-digit Major Heads. For instance, 0 and
1 for revenue receipts, 2 and 3 for revenue expenditure, etc. Economic classification is
also achieved by an inherent definition and distribution of some object heads. For
instance, generally “salary” object head is revenue expenditure, “construction” object
head is capital expenditure. Object head is the primary unit of appropriation in the
budget documents.

Chart 1.3: Structure of Government Accounts

Government Accounts

Contingent Fund Consolidated Fund Public Account

to meet unforeseen to finance public Government act as a
expenditure expenditure trustee

Receipts Expenditure

Revenue Capital Revenue Expenditure

Capital
Receipts Receipts Expenditure for the
Expenditure
Taxes, Non-tax Debt normal running of
Creation of
Revenue, Share Receipts, Government department
Assets like
of Union Non-Debt and services, interest
Projects,
Taxes, Grant- Receipts payment on debt, etc. It
Infrastructure
in-Aid does not result in
etc.
creation of assets

Public Account Receipts

Receipts of Small Savings, Provident
Funds, Reserve Funds, Deposits, Loans Public Account Payments
etc. Payments towards Small Savings, Provident
Funds, Reserve Funds, Deposits, Loans etc.

Fund based accounting coupled with functional and economic classification of

transactions facilitates in-depth analysis of Government activities/transactions and
enables Legislative oversight over public finances.

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Budgetary Processes

In terms of Article 202 of the Constitution of India, the Governor of Rajasthan caused
to be laid before the State Legislature, a statement of the estimated receipts and
expenditure of the State for the year 2019-20, in the form of an Annual Financial
Statement (referred to as Budget) with estimates of expenditure,
• charged upon the Consolidated Fund of the State;
• the sums required to meet other expenditure proposed to be made from the
Consolidated Fund of the State and shall distinguish expenditure on Revenue
Account from other expenditure.
In terms of Article 203, the above was submitted to the State Legislature in the form of
55 Demands for Grants/Appropriations and after approval of these, the Appropriation
Bill was passed by the Legislature under Article 204 to provide for appropriation of the
required money out of the Consolidated Fund.
As mentioned in Paragraph 1.2, Finance Accounts and Appropriation Accounts
encompass the core data for preparation of the SFAR. These Accounts are based on
actual receipts and expenditure of the State during the year 2019-20 including various
inter-governmental and other adjustments carried out by the Reserve Bank of India
(RBI). Considering that these receipts and expenditure are estimated in the budget and
the expenditure has been approved by the State Legislature, it is important to study the
budget of the State for 2019-20 closely and analyse the actual receipts and expenditure
during the year with reference to the projections made in the budget.
The State Budget Manual details the budget formulation process and guides the State
Government in preparing its budgetary estimates and monitoring its expenditure
activities. Results of audit scrutiny of budget and implementation of other budgetary
initiatives of the State Government are detailed in Chapter 3 of this Report.

1.4.1 Snapshot of Finances

The following table provides the details of actual financial results vis-a-vis Budget
Estimates for the year 2019-20 vis-a-vis actuals of 2018-19.
Table 1.3: Budget Estimates for the year 2019-20 vis a vis actual of 2018-19 and 2019-20
(₹ in crore)
S. Components 2018-19 2019-20 2019-20 Percentage of Percentage of
No. Actual BE Actual Actuals to BE Actuals to
GSDP
1 2 3 4 5 6 7
1 Tax Revenue 57,380 73,743 59,245 80.33 5.8
2 Non-Tax Revenue 18,603 19,124 15,714 82.17 1.5
3 Share of Union 41,853 44,462 36,049 3.5
Taxes/ duties (a) 81.08
4 Grants-in-aid and 20,037 26,676 29,106 109.11 2.9
Contributions
5 Revenue Receipts 1,37,873 1,64,005 1,40,114 85.43 13.7
(1+2+3+4)
6 Recovery of Loans 15,158 16,192 15,670 96.78 1.5
and Advances
7 Miscellaneous 20 25 20 80.00 0.0
Capital Receipts
8 Borrowings and 34,473 32,679 37,654 115.22 3.7
other Liabilities (b)

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S. Components 2018-19 2019-20 2019-20 Percentage of Percentage of

No. Actual BE Actual Actuals to BE Actuals to
GSDP
1 2 3 4 5 6 7
9 Capital Receipts 49,651 48,896 53,344 109.10 5.2
(6+7+8)
10 Total Receipts 1,87,524 2,12,901 1,93,458 90.87 18.9
(5+9)
11 Revenue 1,66,773 1,91,020 1,76,485 92.39 17.3
Expenditure
of which
12 Interest payments 21,695 23,133 23,643 102.20 2.3
13 Grant in Aid for 799 - 5,198 - 0.5
creation of capital
assets
14 Capital 20,751 21,881 16,973 77.57 1.7
Expenditure of
which (c)
15 Capital Outlay 19,638 19,472 14,718 75.59 1.4
16 Loan and 1,113 2,409 2,255 0.2
Advances 93.61
17 Total 1,87,524 2,12,901 1,93,458 90.87 18.9
Expenditure
(11+14)
18 Revenue Deficit 28,900 27,015 36,371 134.63 3.6
(5-11)
19 Effective Revenue 28,101 - 31,173 - 3.1
Deficit (18-13)
20 Fiscal Deficit {17- 34,473 32,679 37,654 115.22 3.7
(5+6+7)}
21 Primary Deficit 12,778 9,546 14,011 146.77 1.4
(20-12)
(a) Includes State’s share of Union Taxes.
(b) Borrowings and Other Liabilities: Net (Receipts-Disbursements) of Public Debt + Net of Contingency
Fund + Net (Receipts - Disbursements) of Public Account + Net of Opening and Closing Cash Balance.
(c) Expenditure on Capital Account includes Capital Expenditure and Loans and Advances disbursed.

1.4.2 Snapshot of Assets and Liabilities of the Government

Government accounts capture the financial liabilities of the Government and the assets
created out of the expenditure incurred. The liabilities consist mainly of internal
borrowings, loans and advances from GoI, receipts from public account and reserve
funds and the assets comprise mainly the capital outlay and loans and advances given
by the State Government and cash balances. Table 1.4 and Appendix 1.2 give an
abstract of such liabilities and the assets as on 31 March 2020.

Table 1.4: Summarised position of Assets and Liabilities

(` in crore)
Liabilities Assets
2018-19 2019-20 Per cent 2018-19 2019-20 Per cent
increase increase
Consolidated Fund
A Internal
2,19,311.48 2,42,077.41 10.4 a Gross Capital 1,88,108.83 2,02,806.46 7.8
Debt
Outlay
B Loans and
13,927.40 17,302.50 24.2 b Loans and 23,262.49 9,847.92 (-) 57.7
Advances
from GoI Advances

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Liabilities Assets
2018-19 2019-20 Per cent 2018-19 2019-20 Per cent
increase increase
Contingency Fund
Contingency 500.00 500.00 -
Fund
Public Account
A Small 47,478.08 51,468.62 8.4 a Advances 3.21 3.21 -
Savings,
Provident
Funds,
etc.
B Deposits 28,817.51 33,842.46 17.4 b Remittance 2.05 10.37 405.9

C Reserve 5,551.37 9,881.68 78.0 c Suspense and 206.65 120.15 (-) 41.9
Funds Miscellaneous
D Remittanc - - Cash balance 5,793.75 7,704.41 33.0
-es (including
investment in
Earmarked
Fund)
Total 2,17,376.98 2,20,492.52 1.4
Deficit in 98,208.86 1,34,580.15 37.0
Revenue
Account
Total 3,15,585.84 3,55,072.67 12.5 Total 3,15,585.84 3,55,072.67 12.5
Source: Finance Accounts

During 2019-20, the assets increased by 1.4 per cent, while the liabilities increased by
12.5 per cent over the previous year.

1.5 Fiscal Balance: Achievement of deficit and total debt targets

Nature of deficit is an indicator of the prudence of the fiscal management of the
Government. Further, the ways in which the deficits are financed and the application of
the resources raised are important pointers to the fiscal health of the state. This Section
presents trends, nature, magnitude and the manner of financing these deficits and also
the assessment of actual levels of revenue and fiscal deficits vis-à-vis targets set under
Rajasthan FRBM Act/Rules for the financial year 2019-20.

In pursuance of recommendations of the Twelfth Finance Commission, the State

Government had enacted its ‘Fiscal Responsibility and Budgetary Management
(FRBM) Act 2005’, with a view to ensure prudence in fiscal management and to
maintain fiscal stability in the State. It was amended in the years 2011 and 2016.
Besides this, the Fourteenth Finance Commission (XIV-FC) had also suggested fiscal
consolidation roadmap for the state.

Review of fiscal situation of the state revealed the following:

(i) As per the provisions contained in Section 6(a) of FRBM Act, the State
Government was to achieve Zero Revenue Deficit from the financial year 2011-12 and
thereafter maintain it or attain revenue surplus. However, the State Government could
maintain the revenue surplus only during the years 2011-12 and 2012-13 and thereafter
there has been revenue deficit during last seven years up to 2019-20.
The Budget Estimates (BE), Revised Estimates (RE) and Actual figures in respect of
Revenue Deficit/Surplus during the last six years are summarised below:

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Table 1.5: Position of Revenue deficits/surplus in the context of BE/RE and Actual

(` in crore)
2014-15 2015-16* 2016-17* 2017-18* 2018-19 2019-20

With Without With Without

UDAY UDAY UDAY UDAY
Budget (+)738 (+) 557 (-) 8,802 (-)13,528 (-)17,455 (-)5,455 (-) 27,015 (-)13,199
Estimates
Revised (-)4,220 (- )5232 (-)17,838 (-)20,166 (-)24,825 (-)12,825 (-) 28,041 (-)14,225
Estimates
Actual (-)3,215 (-) 5,954 (-)18,114 (-)18,535 (-)28,900 (-)16,900 (-)36,371 (-) 22,555
*with the impact of UDAY 1

It is seen from the above table that the revenue deficit stood at ` 36,371 crore which
was higher than the projections made in BE (` 27,015 crore) and RE (` 28,041 crore).
The above table also indicates that the formulation of BE for 2014-15 to 2019-20 was
deficient as there was regular and significant fall in RE and Actuals in comparison to
BE during these years.
State Government was unable to contain revenue deficit to the budgeted estimates
during 2019-20 as the actual revenue receipt declined to ` 1,40,114 crore (including
` 4,440 crore received from Government of India on account of compensation for loss
of revenue arising out of implementation of GST) against ` 1,64,005 crore in BE i.e.
14.57 per cent (` 23,891 crore) whereas the actual revenue expenditure decreased to
` 1,76,485 crore against ` 1,91,020 crore in BE i.e. 7.61 per cent only (` 14,535 crore).
Thus, greater fall in revenue receipts than budgeted and relatively less control over
expenditure was the reason for the increase in revenue deficit which indicates that the
state requires more realistic estimates of receipts and expenditure while preparing the
budget of the State.

The Department accepted the facts and stated (December 2020) that the target of
Revenue Receipts could not be met due to recession in the State’s economy. In addition,
the greater decline in revenue receipts than revenue expenditure was mainly due to
committed expenditure including salaries, pensions, etc. which could not be reduced.

(ii) Section 6 (b) of the FRBM Act, envisaged (as amended in 2011) to achieve
fiscal deficit of 3 per cent of GSDP by the financial year 2011-12 and thereafter to
maintain the said ratio or reduce it. The XIV–FC also recommended maintaining the
fiscal deficit within 3 per cent of the GSDP.
The following table shows the trend of fiscal deficit-GSDP ratio during the last three
years:

1. Ujwal DISCOM Assurance Yojana (UDAY) is the financial turnaround and revival package for
electricity distribution companies (DISCOMs) initiated by the Government of India with the intent
to find a permanent solution to the financial mismanagement.

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Table 1.6: Position of Fiscal deficit in the context of BE/RE and Actual
Years Budget Estimates Revised Estimates Actual
2017-18 2.99 3.46 3.03
2018-19 2.98 3.39 3.66
2019-20 3.19 3.16 3.69

It is observed that the fiscal deficit as a percentage of GSDP during 2019-20 is higher
than the target of 3 per cent prescribed under the FRBM Act and XIV-Finance
Commission recommendation. The fiscal deficit stood at ` 37,654 crore which was
higher than the projection in BE (` 32,679 crore) and RE (` 32,214 crore).
The Department accepted the facts and stated (December 2020) that the deficit targets
could not be met due to recession in the State’s economy.

(iii) The State Government amended (April 2016) the provisions of Section 6(c) of
the FRBM Act to prescribe the limit of total outstanding debt up to 34.0 per cent of
GSDP for the financial year 2019-20. However, the Debt-GSDP ratio was 34.55 during
2019-20, which was higher than the limit fixed in FRBM Act.
Table 1.7: Compliance with provisions of FRBM Act
(` in crore)
Fiscal Parameters Fiscal targets Achievement
set in the Act 2015-16 2016-17 2017-18 2018-19 2019-20
Revenue Deficit (-) / Revenue -5,954 -18,114 -18,535 -28,900 -36,371
Surplus (+) Surplus ✖ ✖ ✖ ✖ ✖
Fiscal Deficit (-)/ Three per -63,070 -46,318 -25,342 -34,473 -37,654
Surplus (+) (as cent (-9.25) (-6.09) (-3.03) (-3.66) (-3.69)
percentage of GSDP) ✖ ✖ ✖ ✖ ✖
Ratio of total Target 36.50 36.50 35.50 35.00 34.00
outstanding debt to
GSDP (in per cent) Achievement 30.73 33.52 33.67 33.03 34.55
✖

The XIV-FC inter-alia recommended Fiscal Environment and Fiscal Consolidation

Roadmap for the States. This included (a) providing statutory ceiling on the sanction of
new capital works to an appropriate multiple of the annual budget provision, (b)
replacing the existing FRBM Act with a debt ceiling and Fiscal Responsibility
Legislation under Article 293(1).

The Department stated (December 2020) that the recommendation regarding statutory
ceiling on sanction of new capital works has not been implemented by the state as it
was not found feasible. In addition, recommendation related to debt ceiling and Fiscal
Responsibility Legislation was implemented by amending the existing FRBM Act.

Comparison of targets for fiscal parameters projected in Medium Term Fiscal Plan
(MTFP) presented to the State Legislature with actuals for the current year is provided
in the table below:

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Table 1.8: Actuals vis-à-vis projection in MTFP for 2019-20

(₹ in crore)
S. No. Fiscal Variables Projection Actuals Variation
as per (2019-20) (in per
MTFP cent)
1 Own Tax Revenue 73,743 59,245 (-) 19.67
2 Non-Tax Revenue 19,124 15,714 (-) 17.83
3 Share of Central Taxes 44,462 36,049 (-) 18.92
4 Grants -in-aid from GoI 26,676 29,106 9.11
5 Revenue Receipts (1+2+3+4) 1,64,005 1,40,114 (-) 14.57
6 Revenue Expenditure 1,91,020 1,76,485 (-) 7.61
7 Revenue Deficit (-)/Surplus (+) (5-6) (-) 27,015 (-) 36,371 34.63
8 Fiscal Deficit (-)/ Surplus (+) (-) 32,678 (-) 37,654 15.23
9 Debt-GSDP ratio (per cent) 33.19 34.55 4.10
10 GSDP growth rate at current prices (per cent) 10.24 8.32 (-) 18.75

As can be seen from the table, the actuals in relation to two key fiscal parameters i.e.,
Revenue Deficit and Fiscal Deficit exceeded the projections of MTFP and projections
relating to Debt-GSDP ratio and growth rate of GSDP were not met, with the year
ending with a higher Debt to GSDP ratio and with lower growth in GSDP than was
projected in the MTFP.

Charts 1.4 and 1.5 present the trends in deficit indicators over the period 2015-20.

Chart 1.4: Trends in deficit parameters

0
-5954 -5954 -6269 -5622
-10000 -11062 -12778 -14011
-9114 -18114 -18535
-20000
-23020 -28900
-30000
-23946 -28641 -25342 -36371
-40000 -34473
-51062 -37654

-50000 -46318

-60000
-63070
-70000
2015-16* 2015-16 2016-17* 2016-17 2017-18 2018-19 2019-20
Revenue Deficit -5954 -5954 -9114 -18114 -18535 -28900 -36371
Fiscal Deficit -23020 -63070 -23946 -46318 -25342 -34473 -37654
Primary Deficit -11062 -51062 -6269 -28641 -5622 -12778 -14011

Revenue Deficit Fiscal Deficit Primary Deficit

* Without UDAY.

State Finances Audit Report 12

for the year ended 31 March 2020
Overview

Chart 1.5: Trends in Deficit Indicators (with UDAY) Relative to GSDP

(In per cent to GSDP)

0.0

-0.9 -0.7
-2.0 -1.4 -1.4
-2.4 -2.2
-3.0 -3.1
-4.0 -3.7 -3.6 -3.7
-3.8

-6.0
-6.1

-8.0 -7.5

-9.2
-10.0
2015-16 2016-17 2017-18 2018-19 2019-20

RD/GSDP FD/GSDP PD/GSDP

Chart 1.6: Trends in Fiscal Liabilities and GSDP

(₹ in crore)

400000 37
36.5 36.5
352702
36
350000
35.5
311374
34.55 35
300000 281182 35
34 34
33.53 33.67
250000 255002 242077
33.03 33
209386

200000 32
219312

200244 31
150000 30.73
184285
30
148292
100000 17303
13927
12063 29
8258 11139
50000
28
52836 59578 68875 78135 93322
0 27
2015-16 2016-17 2017-18 2018-19 2019-20
Internal Debt Loans from GoI
Public Account Liabilities Total Outstanding Liabilities
Total Outstanding Liabilities to GSDP ratio Target

During 2019-20, fiscal liabilities increased by 13.27 per cent (` 41,328 crore) over the
previous year due to increase in Internal Debt by 10.38 per cent (` 22,765 crore), Public
Account Liabilities by 19.44 per cent (` 15,187 crore) and Loans and Advances from
GoI by 24.24 per cent (` 3,376 crore).

13 State Finances Audit Report

for the year ended 31 March 2020
Overview

The fiscal liabilities of ` 3,52,702 crore existing on 31 March 2020, included

outstanding borrowings of ` 44,730 crore under UDAY, on account of the issue of Non-
Statutory Liquidity Ratio (SLR) Bonds and forfeited Bonds which constituted Internal
Debt of the State Government.
During 2019-20, the fiscal liability (total outstanding debt) to GSDP ratio (34.55 per
cent) was higher than the FRBM target (34.0 per cent), the limit (24.4 per cent)
recommended by the XIV-FC as well as the MTFP target (33.13 per cent) of the State
Government. Further, the State Government’s annual incremental borrowings2
(` 41,328 crore) were higher than the ceilings for annual borrowings fixed by the GoI
(` 33,216 crore) as per the recommendations of XIV-FC.
The Department accepted the facts and stated (December 2020) that the debt-GSDP
ratio was marginally higher due to additional borrowing allowed by Central
Government.

1.6 Deficits and Total Debt after examination in audit

In order to present a better picture of State Finances, there is a tendency to classify
revenue expenditure as capital expenditure and to conduct off-budget fiscal operations.

1.6.1 Post audit - Deficits

Misclassification of revenue expenditure as capital and off budget fiscal operations
impact deficit figures. Besides, deferment of clear-cut liabilities, not depositing cess/
royalty to Consolidated Fund, short contribution to New Contributory Pension Scheme
(NPS), sinking and redemption funds, etc. also impact the revenue and fiscal deficits.
In order to arrive at actual deficit figures, the impact of such irregularities need to be
reversed.
Table 1.9: Revenue and Fiscal Deficit, post examination by Audit
Particulars Impact on Impact on
Revenue Deficit Fiscal Deficit
(Understated) (Understated)
(` in crore) (` in crore)
Short transfer of employees and Government contribution to 83.27 83.27
NSDL under Defined Contribution Pension Scheme
Non-transfer of funds to State Disaster Response Fund 784.60 784.60
received from the Government of India under National
Disaster Response Fund
Non-credit of interest on available balance in State 55.95 55.95
Compensatory Afforestation Fund
Non-transfer of cess on diesel and petrol to Rajasthan State 252.51 252.51
Road Development Fund
Non-transfer of Environmental and Health cess to 0.85 0.85
Environmental Reforms and Health Fund
Non-transfer of Water Conservation Cess to Fund 86.17 86.17
Non-transfer of Surcharge on Stamp Duty for the 227.52 227.52
conservation and propagation of Cow and its progeny

2. It includes Open Market Borrowings, Negotiated Loans from financial institutions, National Small
Savings Fund loans, Central Government loans including EAPs, any loans for State Plan Schemes
and Centrally Sponsored Schemes, other liabilities arising out of Public Account transfers under
Small Savings, Provident Funds, Reserve Funds, Deposits, etc.

State Finances Audit Report 14

for the year ended 31 March 2020
Overview

Particulars Impact on Impact on

Revenue Deficit Fiscal Deficit
(Understated) (Understated)
(` in crore) (` in crore)
Non-credit of interest on interest-bearing Reserve Funds and 13.42 13.42
Deposits
Non-transfer of labour cess to Rajasthan Building and Other 30.23 30.23
Construction Workers Welfare Board
Total 1,534.52 1,534.52
Source: Finance Accounts and audit analysis

It is evident that the State Government short transferred ` 1,534.52 crore during the
financial year 2019-20, thus, understating the revenue deficit and fiscal deficit to that
extent.

1.6.2 Post Audit - Total Public Debt

According to Rajasthan FRBM Act, 2005, the total liability means the explicit liabilities
under Consolidated Fund of the State and the Public Account of the State including
General Provident Fund.

Table 1.10: Overall debt, post examination by Audit

1. Overall Debt as per as a percentage
Accounts of GSDP
(` 3,52,701.80 crore) (34.55 per cent)
2. Impact on overall Debt (Understated)
due to: (₹ in crore)
a. (i) Off budget fiscal operations such as borrowings 1,901.54 0.18
by ‘Various ‘Zila Parishads’ on behalf of the
State Government where the principal and/ or
interest are to be serviced out of the State budgets.
(ii) Off budget fiscal operations such as 1,000.00 0.10
borrowings by ‘Rajasthan Agriculture
Marketing Board’ on behalf of the State
Government where the principal and/or interest
are to be serviced out of the State budgets
b. Deployment of the own funds by the State Public - -
Sector Companies/Corporations, SPVs etc. for the
execution of the Deposit work of the State
Government which was to be financed by the State
Government through borrowings.
c. Non-reimbursement of the Principal/interest - -
component by the State Government to State
Public Sector Companies/ Corporations, SPVs etc.
of the loan taken by them on the behalf of the State
Government:
i. for 2019-20 - -
ii. of the previous years - -
Total of 2 (a+b+c) 2,901.54 0.28
Total of (1 + 2) 3,55,603.34 34.83

Thus, the off budget fiscal operations amounting to ` 2,901.54 crore during the financial
year 2019-20 resulted in understating of the overall debt by 0.28 per cent of GSDP.

15 State Finances Audit Report

for the year ended 31 March 2020