TG among States significantly dependent on WMA despite being revenue surplus, says CAG

The Comptroller and Auditor General of India (CAG) has expressed concern over the significant dependence of the State on Ways and Means Advances (WMA), loans from Reserve Bank of India to bridge short term mismatches between revenue and expenditure.

Telangana was among the three States, Rajasthan and Andhra Pradesh being the other two, which availed 62% of the total WMA, including overdraft during 2023-24. The duration of WMA usage in Telangana was 349 days suggesting near continuous dependence throughout the year, the CAG said in its report.

The State government was in revenue surplus during the fiscal yet it availed WMA indicating the mismatch between inflows and ouflows of receipts leading to reliance on WMA. Continued reliance on the Ways and Means Advances by the States, including those in revenue surplus points to cash flow management challenges. “In many States, the trend underscores persistent fiscal pressures, narrowing flexibility within the State budget and the need for prudent debt management practices to ensure, long term sustainability,” the CAG said in its decadal analysis of State finances.

Telangana along with Chhattisgarh, Karnataka, Maharashtra, Rajasthan and Uttar Pradesh witnessed substantial increase in fiscal deficit in 2023-24 as compared to the previous fiscal.

The State was among 18 others which registered fiscal deficit of 3.41% of the GSDP during 2023-24. This was against the fiscal deficit target of 3% fixed by the XV Finance Commission for the States fiscal consolidation.

The State however did well in checking the revenue deficit as it achieved revenue surplus during the fiscal. Telangana along with six other States targeted zero revenue deficit at the end of 2023-24 and achieved revenue surplus. Internal debt was another concern remaining as the largest component of the State’s borrowings. Internal debt of all States put together increased by 229% between 2014-15 and 2023-24 with the increase being uneven across the State. Telangana (376%) along with Assam (428%), Chhattisgarh (423%) and Sikkim (364%) reported highest increase in the internal debt over the decade.