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CAG raps Maharashtra government for lack of policy on grant of guarantees

The Comptroller & Auditor General (CAG) has rapped the Maharashtra government for not framing any policy regarding the grant of guarantees to cooperative sugar factories and state corporations.

The committed liabilities of the state government on account of invocation of guarantees as on March 31, 2013 stood at Rs 2,583.45 crore.

Besides, CAG observed that there was a lack of control and effective monitoring on recovery of guarantee fee from beneficiary institutions. The government has also not fixed the limits for guarantees. Further, the Maharashtra Fiscal Responsibility & Budget Management Act, 2005 too did not contain any provisions laying down the limits.

In its report on state finances for the year ended March 2013, CAG said of the 130 cases approved by the state cooperation, marketing and textile department between 1992 and 2012, guarantee deeds were not executed in 100 cases. The guarantee clause in the deeds were unfavourable to the government.

Further, CAG said the data on guarantees given by the state government was not updated/corrected and thus, unreliable.  The recovery of loans given by six state corporations to the beneficiaries under the social justice and special assistance department was poor as a result of which, the government had to waive off Rs 134.41 crore due from the beneficiaries.

Moreover, the test check of 14 institutions in eight departments revealed that the respective administrative departments did not maintain the details of repayment of loans, recovery of guarantee fee and outsanding guarantee fee.   The amount of guarantee fees recoverable from those 14 institutions stood at Rs 1,534.86 crore. “This indicated lack of controls and effective monitoring on recovery of guarantee fee and penal interest,” CAG said.

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