The State Government is being chastised by the CAG for using borrowed funds to fulfill current expenses and repay outstanding debt interest

The Maharashtra government should ideally employ borrowed cash to fund capital creation and developmental activities, according to the Comptroller and Auditor General (CAG). "Using borrowed funds to meet current consumption and repay outstanding loans is not sustainable," the report continued. According to the CAG report for 2019-20, which was tabled in the state assembly by Deputy Chief Minister Ajit Pawar, nearly 13 percent of borrowings were used for revenue expenditure in 2015-16 and 2016-17, whereas in 2017-18 and 2018-19, the revenue surplus could be used for capital expenditure in addition to borrowings. The borrowings were insufficient to cover capital expenditures in 2019-20.

Furthermore, the CAG noted that the revenue gap, which was negative in 2016-17, turned positive in 2017-18 and 2018-19, indicating that the state's ability to support the debt in the medium to long term is improving. However, the resource gap went negative in 2019-20 (the last year of the BJP's reign, with Maha Vikas Aghadi taking power after November 2019), putting the country at risk of unsustainable debt. According to the CAG, an expenditure of Rs 3,91,483.19 crores was incurred against a total provision of Rs 4,97,176.38 crores in 2019-20, resulting in a savings of Rs 1,05,693.19 crores (27 percent). In March 2020, Rs 87,795.48 crores were surrendered from the savings.

According to the CAG, the government should take measures to close the revenue gap and cut non-productive revenue expenditures to achieve revenue surplus status. The government may consider mobilizing additional resources from both tax and non-tax sources to accomplish this. To lessen the imbalance in investment against return, the state government may consider making future payments to state-owned firms in the form of grants rather than share capital.

The CAG further suggested that the government enforce effective budget implementation and monitoring to ensure that savings are limited, substantial savings within the grant/appropriation are avoided, and projected savings are recognized and relinquished within the timeframe given. The state government should examine and construct a realistic budget, to the extent practicable, based on reliable assumptions about the departments' needs and their ability to use the assigned resources.

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