CAG report flags discrepancies in the Centre's fiscal math
The CAG's latest report, presented in Parliament on Monday, comes at a time when the government has committed to reducing India's fiscal deficit to below 4.5% of gross domestic product (GDP) by 2025-26, as reiterated in recent medium-term fiscal policy statements.
However, the audit observations suggest gaps in transparency and data consistency that may undermine its fiscal credibility.
The CAG's Report No. 3 of 2025, which assesses compliance with the FRBM Act for the year 2022-23, was earlier presented in the Rajya Sabha on 4 April.
The FRBM Act, enacted in 2003 to ensure inter-generational equity in fiscal management and maintain macroeconomic stability, mandates the CAG to carry out an annual compliance review.
According to the report, the amount of tax revenue raised but not realized rose by ₹ 5.47 trillion in 2022-23 over the previous year to ₹ 21.30 trillion.
Of the ₹ 5.47 trillion, a staggering ₹ 5.28 trillion is not under dispute (meaning it was collectable but had not been recovered), suggesting weak tax enforcement or inefficiencies in recovery processes.
A query sent to the spokesperson of the finance ministry did not elicit a response till press time.
The CAG audit report also pointed to inconsistencies in key fiscal indicators. For instance, the fiscal deficit figure published in the Union government finance accounts (UGFA) for 2022-23 was ₹ 17.56 trillion, while the budget at a glance (BAG) for 2024-25 cited a lower figure of ₹ 17.38 trillion—a discrepancy of ₹ 18,000 crore.
Similar variations were observed in statements on arrears of interest, loans and advances, and fiscal projections published in the half-yearly and medium-term fiscal policy statements, the CAG report highlighted.
The amount of arrears of interest shown in the D2 Statement, ₹ 30,735.89 crore, varied from the amount reflected in the UGFA, ₹ 31,226.74 crore, resulting in a difference of ₹ 490.85 crore.
The amount of loans to foreign governments in the receipt budget was ₹ 16,489.13 crore, whereas the UGFA showed ₹ 16,353.89 crore, a difference of ₹ 135.24 crore.
For loans to states and Union territories, the receipt budget recorded ₹ 2,70,439.38 crore, and the UGFA recorded ₹ 2,70,367.60 crore, a difference of ₹ 71.78 crore.
The fiscal deficit (budget estimates) in the medium-term fiscal policy statement was ₹ 16,61,196 crore, whereas in the annual financial statement, it was shown as ₹ 16,61,196.21 crore.
Despite these shortcomings, the CAG report acknowledged positive signals on the debt front. Central government debt, which had peaked at 61.38% of GDP in 202-21 due to pandemic-related spending, declined to 57.93% by 2022-23.
The CAG, in its report, noted that the pace of debt accumulation in recent years has been lower than GDP expansion, and the debt sustainability indicator for 2022-23 was positive.
The ratio of interest payments to revenue receipts—an indicator of fiscal strain—rose marginally to 35.35% in 2022-23, after declining from a peak of 38.66% in 2020-21.
The CAG audit report also found that additional guarantees issued by the Centre remained within the legal ceiling of 0.5% of GDP in 2022-23.
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