In its latest report tabled in the Gujarat Assembly on Friday, the Comptroller and Auditor General of India (CAG) has recommended that Gujarat government to consider formulating a dividend policy to make a reasonable returns from profit-making state Public Sector Undertakings (PSUs).

The CAG's recommendation comes on the back of meagre 0.21 per cent returns on investments the government made in the State PSUs, statutory corporations and institutions during the period 2013-18.

The CAG noted that during 2017-18, the state government made an additional investment of Rs 8281 crore. This largely included Rs 7,561 crore in State PSUs, Rs 593.29 crore in statutory corporations and Rs 1.47 crore in cooperative institutions during the year 2017-18.

"The average return on investment in these companies, statutory corporations, institutions during 2013-18 was 0.21 per cent, while the government paid an average interest of 7.67 per cent on its borrowings during the same period," the CAG noted in its Audit Report on State Finances as on March 31, 2018.

This underlines the need for better planning of the additional investments. However, the state government has received Rs 97.89 crore as dividend from six of the 50 profit-making State PSUs during fiscal 2017-18.

On the revenue front, the CAG noted that during 2017-18, revenue expenditure increased by 13.63 per cent over the previous year. "Revenue expenditure as per cent of GSDP slightly decreased over the previous year and stood lowest at 8.94 per cent during the last five years," it said.

The expenditure on salaries, interest payments, pension and subsidies increased continuously from RS 35,421 crore in 2013-14 to RS 57,039 crore in 2017-18.

While a major portion of the revenue expenditure was on items which were obligatory in nature such as salaries, pension and interest payments, the CAG pointed out that the state government may explore suitable measures for containing other components of the revenue expenditure. In doing so, therevenue surplus could be maintained, thereby, allowing scope for assets creation and sustainable development of the state.

The tax revenues for 2017-18 stood sharply lower than the projections. The CAG report noted that "tax revenues of the State in 2017-18 stood lower by a significant margin of Rs 41,170 crore than the 14th Finance Commission (FC) projections of Rs 1,12,719 crore."

Notably, the 14th FC had projected a tax-GSDP ratio of 9.42 per cent for 2017-18. "However, it stood lower at 5.42 per cent," CAG noted.

While suggesting to ensure better tax compliance, the CAG recommended that the State government may explore mobilising additional resources through tax revenues.

However, the CAG also noted that the State government spent 98 per cent of its total public debt receipts of Rs 26,952.74 crore for the year 2017-18 on capital expenditure, "indicating better utilisation of borrowed funds for capital formation in creating productive assets."

For the year 2017-18, Gujarat's per capita income stood at Rs 2,06,447, much higher than the all India average of Rs 1,29,800.

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