The Comptroller and Auditor General (CAG) has raised issues regarding the Centre’s fiscal performance and transparency as mandated by the Fiscal Responsibility and Budget Management (FRBM) Act.
In FY2020-21, central government debt as a percentage of GDP soared to 61.38%, surpassing the FRBM cap of 40%. Although it decreased to 58.76% in FY2021-22 and further to 57.93% in FY2022-23, it continues to exceed levels seen before the pandemic.
In terms of absolute figures, the central government debt surged by ₹17.48 lakh crore, or 12.61%, in FY2022-23. Internal debt rose by ₹16.12 lakh crore, while external debt increased by ₹0.90 lakh crore and public account liabilities by ₹0.13 lakh crore.
According to the CAG, from FY2020-21 to FY2022-23, the accumulation of debt was slower than the growth in GDP, suggesting the economy’s enhanced ability to manage debt. However, debt in real terms remains elevated compared to FY2019-20.
The audit highlighted discrepancies in disclosures, pointing out that the Medium Term Fiscal Policy Statement for 2024-25 did not report the actual central government debt for FY2022-23. While the Receipt Budget 2024-25 estimated total liabilities at ₹152.24 lakh crore, the CAG calculated the central government debt at ₹156.13 lakh crore, or 57.93% of GDP, based on the FRBM criteria.
The FRBM Act sets a ceiling of 60% of GDP for general government debt by FY2024-25. As per the CAG, general government debt was recorded at 70.39% of GDP in FY2018-19 and increased to 81.35% in FY2022-23.
Interest payments are a significant concern. In FY2020-21, 38.66% of revenue receipts were allocated to interest expenses. This figure decreased to 33.99% in FY2021-22, but rose again to 35.35% in FY2022-23.
Additional guarantees issued in FY2022-23 amounted to ₹0.61 lakh crore, equating to 0.23% of GDP, well within the FRBM limit of 0.5%.
The report also pointed out discrepancies in extra-budgetary resources. Between FY2016-17 and FY2021-22, extra-budgetary resources were reported at ₹1,37,868.60 crore in the Expenditure Profile 2024-25, contrasting with ₹1,39,287.30 crore in the prior year, uncovering an unexplained variation of ₹1,418.70 crore.
Another issue identified was tax revenue that was raised but not realized. In FY2021-22, this amount was ₹15.83 lakh crore, which swelled to ₹21.30 lakh crore in FY2022-23—almost 70% of total gross tax collections. The CAG noted that better recovery rates could have lessened the need for borrowing.
The audit also identified inconsistencies in key fiscal indicators for Budget Estimates 2022-23 across the Medium Term Fiscal Policy Statement, the Annual Financial Statement, and the bi-annual review, lacking sufficient disclosure.
The CAG concluded that while debt ratios have improved post-pandemic, problems with disclosures, inconsistent data, and high absolute debt levels persist, hindering fiscal transparency.
