Rajasthan’s fiscal woes persist across governments, CAG flags deficit breaches

Jaipur, Aug 25 (IANS) A latest Controller and Auditor General (CAG) report has raised serious concerns over Rajasthan’s fiscal management, showing that the state’s fiscal deficit remained above prescribed limits for most of the period examined, spanning the tenures of Vasundhara Raje and Ashok Gehlot, and Bhajan Lal Sharma governments.

Over the past 12 years, governments in Rajasthan have changed, but the state’s fiscal position has continued to remain under pressure.

Successive governments set targets to contain the fiscal deficit within prescribed limits, yet the CAG findings indicate that these targets were repeatedly missed.

The deficit exceeded benchmarks both in budget estimates and in actual figures. According to the CAG report, Rajasthan’s fiscal deficit fluctuated significantly between 2015-16 and 2024-25. It stood at 9.25 percent in 2015-16, fell to 6.09 percent in 2016-17 and reached 3.04 percent in 2017-18.

It subsequently remained above 3 percent in every year covered by the data, rising to 5.83 percent in 2020-21 before moderating in later years.

The deficit was recorded at 4.31 percent in 2023-24 and 4.25 percent in 2024-25. The state’s revised estimate for 2025-26 puts the fiscal deficit at 3.89 percent, while the 2026-27 budget estimate projects it at 3.69 percent.

The government’s medium-term projections put the deficit at 3.49 percent in 2027-28 and 3.29 percent in 2028-29.

The report also points to weaknesses in revenue management.

Although revenue receipts increased, they remained below budget estimates, while Rajasthan continued to depend heavily on transfers and support from the Central Government.

The fiscal position also has implications for revenue expenditure.

The objective under the Fiscal Responsibility and Budget Management framework was to eliminate the revenue deficit and bring the fiscal deficit down to 3 percent or less of GSDP. Rajasthan achieved a revenue surplus only in 2011-12 and 2012-13; thereafter, the state returned to a deficit position, increasing its dependence on borrowing to finance expenditure.

The CAG has recommended that Rajasthan strengthen its fiscal management through regular quarterly reviews of own-tax revenue forecasts and department-wise scrutiny of revised budget estimates. It has also called for a clear roadmap to raise the state’s own-tax revenue-to-GSDP ratio, with annual targets.

Among other recommendations, the CAG suggested creating a dedicated fund for pension payments under the old pension scheme, developing a dashboard to monitor department-wise grants, and introducing outcome-based monitoring of major revenue expenditure items.

The report further recommends restructuring and managing the state’s debt to reduce the interest burden, ensuring that cess collections are deposited into designated government accounts on time, and using borrowed funds primarily for creating capital assets rather than financing revenue expenditure.

The CAG has recommended several measures to improve Rajasthan’s fiscal management. It suggests that the Finance Department should establish a quarterly revenue forecasting review mechanism to improve estimates of the state’s own tax revenue. It has also suggested a department-wise analysis of revised budget estimates, with corrective measures given priority wherever gaps are identified.

The report recommends preparing a clear roadmap to increase the ratio of the state’s own tax revenue to GSDP, along with annual targets.

It has also called for a dedicated fund for pension payments under the Old Pension Scheme (OPS), a dashboard to track department-wise grants, and an outcome-based monitoring system for major heads of revenue expenditure.

To reduce the interest burden, the state should undertake fresh debt management and restructuring. The CAG has further stressed that proceeds from all types of cesses should be deposited on time into the designated government accounts. The report also recommends that borrowed funds should primarily be used to create capital assets rather than finance routine revenue expenditure.

This, the CAG suggests, would ensure that borrowing contributes to long-term development while strengthening the state’s fiscal position. Taken together, the figures present a picture of a fiscal challenge that has persisted across successive administrations.

The CAG’s findings, therefore, put the focus not only on the policies of the present government but on the longer-term financial management of Rajasthan across multiple political regimes.

–IANS

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