CAG frowns at 'footnote' accounting, says external debt underrated by over Rs 2 lakh crore

Union Budget showed external Debt of Rs 4.39 lakh crore at ‘historic rate of exchange’ whereas at the current exchange rate, shown in small print as a footnote, the actual debt was Rs 6.58 lakh crore

Photo for representation. PTI

Tribune News Service

Sandeep Dikshit

New Delhi, September 18

A CAG report has frowned at the Centre’s practice of disclosing the actual situation through footnotes which resulted in the main part of the Union Budget showing External Debt of Rs 4.39 lakh crore at “historic rate of exchange” whereas at the current exchange rate, shown in small print as a footnote, the actual debt was Rs 6.58 lakh crore.

“It was observed that the latter was Rs 2.18 lakh crore higher than what was shown at historical rate. This disclosure of the value of external debt only through a footnote affected the transparency of the accounts,” noted the CAG’s financial audit of the Central Government for the 2021-22 fiscal.

It also pointed out that the calculation of external debt at “historical rate of exchange” was a violation of the FRBM Act 2003 which specifies the valuation of External Debt at current exchange rates.

Similarly, the difference of the Centre’s account with RBI’s closing cash balance was also shown in a footnote. This footnote gave a break-up of the difference between Civil Ministries, Non-Civil Ministries, UTs and broad reasons for the differences. “Disclosure through the footnote was inadequate as the difference was shown on a net basis and thus, did not capture its totality in terms of separate credits and debits that made up the difference,” the CAG noted.

The CAG also pointed out that a large number of footnotes were inserted in all the 16 statements of the Union Government’s financial accounts for 2021-22 for disclosing additional information.

These footnotes, though relating to significant transactions, lacked clarity and in some cases were being repeated year after year without resolution, it said.

In their response, the Controller General of Accounts (CGA) stated that the footnotes are inserted to qualify transactions during the year or the balances appearing in the Union Government’s financial accounts (UGFA). In some cases, the footnotes are also inserted to provide additional information to the stakeholders, which is not part of the format of UGFA.

Its defence was the footnotes are inserted below the pages where these transactions are reported to aid readability. “However, feasibility for inserting ‘Notes to Accounts’ is being examined,’’ conceded the CGA.