Wed Mar 05 16:16:05 UTC 2025: ## CAG Highlights Fiscal Concerns, Proposes Reforms in Meeting with Finance Commission

**Bhopal, March 5, 2025** – Comptroller and Auditor General of India (CAG) K. Sanjay Murthy met with the 16th Finance Commission in Bhopal today to discuss key fiscal challenges facing the nation. The meeting, led by Finance Commission Chairperson Arvind Panagariya, focused on Union and State finances, local bodies, and Public Sector Enterprises (PSEs).

The CAG presented audit findings highlighting a concerning gap between government expenditure and non-debt receipts. A decline in State Own Tax Revenue (SOTR) buoyancy and variations in SOTR and Non-Tax Revenue across states were also flagged. Mr. Murthy emphasized the need for improved reporting of Off Budget Borrowings, adherence to Fiscal Responsibility and Budget Management targets, and consideration of post-audit liabilities in government accounting.

To improve fiscal performance, the CAG recommended enhancing revenue collection in areas like stamp duty, registration fees, and State excise through measures such as updated market value guidelines, improved property classification, and the adoption of modern technology like sensor-based systems and QR codes.

Significant reforms were proposed for Goods and Services Tax (GST) administration, including integrating unregistered goods and service providers through automated data collection and improved taxpayer verification. The CAG also suggested standardizing accounting practices across all government tiers, starting with harmonizing Local Bodies’ accounts with Central and State accounts in the top 100 cities.

Performance audits of urban local bodies and Panchayati Raj Institutions revealed issues such as incomplete devolution of functions, over-reliance on Central and State grants, and low own-source revenue. The CAG recommended the use of an Integrated Financial Management System by local bodies to streamline accounting and fund transfers.

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