Compliance Financial Performance

Report of 2009 – Compliance, Financial and Performance Audit on State Finance of Government of Maharashtra

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In order to secure fiscal stability and sustainability by eliminating revenue deficit and reducing fiscal deficit within a time frame and transparency in fiscal operations, the Twelfth Finance Commission recommended enactment of fiscal responsibility legislation by the States. Accordingly, Maharashtra Government enacted its "Fiscal Responsibilities and Budget Management Act (FRBM)" in April 2005 and framed the relevant rules in February 2006. Government's commitment to carry forward the reform agenda set out in its Medium Term Fiscal Policy Statement is largely reflected in certain policy initiatives announced in the State budgets subsequently.

Government has established an institutional mechanism on fiscal transparency as evident from the presentation of Government liabilities including off-budget borrowings, quality of investment on outcomes in selected sectors, along with the State budgets. They do not, however, give the status of other important aspects such as returns from the investment made in State undertakings and co-operatives, cash management by the Government, financing the deficit, position of incomplete projects and how the allocated resources are managed by the departments. The civil report of the Comptroller and Auditor General covers all these aspects.

CAG's civil reports for last three years have commented upon the Government's finances since the FRBM legislation. Since the audit findings on State finances formed part of the civil audit report, it was felt that these comments remained camouflaged in the large body of audit findings on compliance and performance audits and hence did not receive due attention. In recognition of the need to bring State finances to center stage once again, a stand-alone report on State Government finances is considered appropriate. Accordingly, from the report year 2009 onwards, C&AG has decided to bring out a separate volume titled "Report on State Finances."

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