Learning Objective:
The trainees will be able to know about the
Government investment in Equity, and
about the Public Debt and other Liabilities
of Governments
►
Overview and Structure:
►
The investments made by the Union and the State
Governments in Statutory Corporations, Government
Companies, other Joint Stock Companies, Co-operative
Banks and Societies, and International Bodies by way
of subscription to equity instruments of these entities
The objective of the IGAS-10 is to lay down the
principles for identification, measurement and
disclosure of public debt and other obligation of Union
and the State Governments including Union Territories
with legislatures in their respective financial
statements. It ensures consistency with international
practices for accounting of public debt in order to
ensure transparency and disclosure in the financial
statements of Government for the benefit of various
stake holders
►
Indian Government Accounting Standard-9
GOVERNMENT INVESTMENTS IN EQUITY
Introduction
1.1 Investments are made by the Union and the State
Governments in Statutory Corporations, Government
Companies, other Joint Stock Companies, Co-operative
Banks and Societies, and International Bodies by way of
subscription to equity instruments of these entities.
► 1.2 Investments by the governments constitute a
portion of capital outlay of the Governments and
dividends received are part of non tax revenue.
► 1.3 Government investments are primarily in the Public
Sector wherein the focus is not only on generating
adequate return on investments but also to ensure rapid
economic growth, balanced regional development,
employment generation, and meeting strategic and
infrastructural requirements
►
►
Objective
► The
objective of the Standard is to lay down the
norms for Recognition, Measurement and
Reporting in respect of Investments made by the
Union Government, the State Governments and
Governments of Union Territories with
Legislatures in their respective Financial
Statements to ensure complete, accurate,
realistic and uniform accounting practices, and
to ensure adequate disclosure on investments
made by the Governments consistent with best
international practices.
Scope
► This
Standard applies to entities which keep a
record of investments made by the Government
for incorporation and presentation in the
Annual Financial Statements of the
Government. This standard will apply only to
government accounts being maintained on a
cash basis. This standard applies to only
instruments that are in the nature of equity of
the investee entities and not to debt instruments
like debentures, bonds, preference shares etc.
Financial Statements will not be considered as
giving fair and complete picture of Investments
unless they comply with these standards
Definitions
►
►
►
►
►
►
►
►
4.1 The following terms used in the Standard have meanings as specified
here under, unless the context otherwise requires:
Accounting Authority is the authority which prepares the Financial
Statements of the Governments.
Accounting Period means the period covered by the Financial
Statements.
Bonus shares are shares issued free of cost to the shareholders of
a company, by capitalizing a part of the company’s reserves.
Cash Basis of accounting is that wherein accounting transactions
of an entity represent the actual cash receipts and disbursements
during a financial year as distinguished from the amount due to or
by the entity during the same period.
Consolidated Fund of India is the fund referred to in clause (1)
Article 266 of the Constitution of India.
Consolidated Fund of the State is the fund referred to in clause (1)
Article 266 of the Constitution of India.
Debentures are an instrument of debt executed by the company
acknowledging its obligation to repay the sum at a specified rate
and also carrying an interest.
►
►
►
►
►
►
►
►
►
►
►
►
►
Equity is the residual interest in the assets of the enterprise after
deducting all its liabilities.
Equity Instrument is any contract that evidences a residual interest in
the assets of an enterprise after deducting all of its liabilities.
Equity shares are all shares which are not preference shares.
Financial statements mean the Annual Finance Accounts of the
respective Governments.
Government means the Union Government or any State
Government or Government of any Union Territory with Legislature.
Historical Cost is the transaction value including incidental costs at
the time of transaction
Investee Entity is an entity in whom an investment is sanctioned by
the Government.
Investee Group consists of a group of investee entities of similar
nature and characteristics.
Investments are financial assets created by the Governments by
providing money, goods or services directly or indirectly to the
investee entities. These financial assets are in the nature of equity of
the investee entities.
Major Heads of account represent the functions of Government as per
the ‘List of Major and Minor Heads of Account of Union and States’.
Minor Heads of account represent various programmes undertaken
by departments of Government to achieve the objectives of the
function represented by the major head as per the ‘List of Major and
Minor Heads of Account of Union and States’.
Net worth is the total assets minus total outside liabilities
Parliament means the Parliament of India.
►
►
►
►
Planning Commission means the Central
Planning Commission set up by the Government
through a resolution in 1950.
Preference shares are shares which have the
following two characteristics; (a) that as
respects dividends they carry or will carry a
preferential right to be paid a fixed amount or an
amount calculated at a fixed rate. (b) that as
respect capital, it carries or will carry, on winding
up or repayments of capital, a preferential right
to be repaid the amount of the capital paid-up
or deemed to have been paid up.
Sector consists of a grouping of specific
functions or services as per the ‘List of Major and
Minor Heads of Account of Union and States’.
Sub-Major Heads of account represent the subfunctions of Government and are under the
Major Heads and are as per the ‘List of Major and
Minor Heads of Account of Union and States’.
Recognition
► 5.1
An investment shall be recognized by the
disbursing entity as an asset from the date the
money is actually disbursed and not from the date
of sanction.
► 5.2 Loans converted into equity shall be treated
as investments from the date of conversion in as
much that they shall lead to an increase in the
investment amount from the date of conversion.
Measurement and Valuation
►
►
►
►
6.1 Historical Cost measurement shall be the basis for
accounting and reporting on investments made by
Governments
6.2 The total amount of investments on the last date
of a accounting period shall be the investments at the
beginning of the period with additions and
disinvestment/ sale of investments during the period.
6.3 The method of initial measurement and valuation of
investments in the Financial Statements of the
Governments is to measure at historical cost of the
investments.
6.4 Subsequent to initial valuation too, Investments will
be reflected in the Financial Statements at Historical cost
Disclosure
7.1 The Financial Statements of the Union and State Governments
shall disclose the Amount of Investments at the beginning and end
of the accounting period showing additional investments and
disinvestments. The financial statements shall also disclose the
dividend received. An additional column in the relevant Financial
Statements shall also reflect the amount of dividend declared. This
amount will not be accounted for but will only be in nature of an
additional disclosure.
► 7.2 The Financial Statements of the Union and State Government
shall disclose the following details under ‘Investments made by the
Union/State Government’ in the Annual Finance Accounts of the
Union Government:
► (a) Summary of Investments: Investee group-wise
► (b) Summary of Investments: Sector-wise.
► 7.3 The Financial Statements of the Union/State Government shall
disclose the following details under ‘Detailed Statement of
Investments made by the Union/State Government’ in the Annual
Finance Accounts of the Union Government:
►
►
►
►
►
(a) Detailed Statement of Investments showing the
Major Head and Minor Head-wise Details.
(b) Detailed Statement of Investments made: Entity
wise
7.4 The Financial Statements of the Union and
government shall disclose the following details under
‘Additional Disclosures’ in the Annual Finance Accounts
of the Union/State Government:
(a) Fresh Investments and deduction/ disinvestment
made during the year.
7.5 The Financial Statements shall reflect the total
amount of investments at the beginning and end of the
accounting period along with the additions made during
the year by way of fresh investments to the opening
balance and deductions there from by way of
disinvestments to arrive at the closing balance. Also the
amount of dividend received will be reflected as revenue
of the period. An additional column in the relevant
Financial Statements shall also reflect the amount of
dividend declared, though not necessarily received.
This amount will only be by nature of an additional
disclosure and not accounted for.
7.6 Financial Statements of both the Union and the State Governments
shall disclose details of Investments made in various investees in their
respective Annual Finance Accounts in three parts. For the Union
Government these would be ‘Investments made by the Union
Government’, ‘Detailed Statement of Investments made by the Union
Government’ and ‘Additional Disclosures’ in the Annual Financial Accounts of
the Union government.
► 7.7 The State Government will have a similar three tier presentation in
Annual Finance Accounts of the State ‘Investments made by the State
Government’, ‘Detailed Statement of Investments made by the State
Government’ and ‘Additional Disclosures’ in the Annual Finance Accounts
of the State Government.
► 7.8 The Detailed Statement of Investments made by the Government, on
the other hand, shall disclose the major head-wise and minor head-wise
details of the investments made by Governments as also detailed
statements of entity wise investments.
► 7.9 Another Detailed Statement of Investments made: Entity wise in the
Finance Accounts of the Governments shall report details including the full
name of the entity, the number of shares and the total amount invested.
While indicating the details, the shares purchased and those allotted as
bonus shall be depicted separately along with year of allotment and then
added together to give the total number of shares. It shall also disclose
the total paid up capital of the entity and its current net worth. This would
help indicate the extent of government control and whether the
investment has appreciated or depreciated. Moreover, where the shares
are traded in the market, the amount of investment in terms of market
value shall also be disclosed as on the last date of the reporting period.
►
7.10 The amount of dividend received and credited to
government revenue shall also be reported entity wise.
In case the dividend received pertains to previous
accounting periods the figure would be starred and the
year to which the amount actually pertains disclosed in
the footnote. In addition, the dividend declared, though
not necessarily paid, shall be disclosed. The net profit or
loss during the year of the entity shall also be disclosed
and this would help indicate the appropriateness of the
dividend amount.
► 7.11 The Third, Additional Disclosure, shall disclose the
fresh investments and disinvestments made during the
reporting period. In addition it would disclose as a
note on investments made in entities which have made
a loss in the accounting period along with reasons for
making the investment.
► 7.12 All the figures in the Financial Statements are ‘in
lakhs’ of rupees.
►
8 Effective date
► This
Indian Government Accounting
Standard becomes effective for the financial
statements effective for the Financial
Statements covering periods beginning 1
April of the year after the notification of the
Standard by the Government.
9- Format for disclosure
►
Financial Statement of Union / State Government
Statement of Investment made by the Union / State Government
Section 1: Summary Investments: Investee Group wise
(Rs in Lakhs)
Investee
Group
1
Balance on
April 1,
20X0
2
Investments
made
during the
year
3
Disinvest
ments
during the
year
4
Balance on
March 31,
20X1
(2+3) - (4)
5
Net
increase/
decrease
during the
year
(2-5)
6
►
Section 2: Summary of Investments : Sector
wise
Sector
1
Balance on
April 1,
20X0
2
Investments
during the
year
3
Disinvestments
during the
year
4
Balance on
March 31,
20X1
(2+3) - (4)
5
Net
increase/
decrease
during the
year
(2-5)
6
►
Sl.
1
Section: 1 Detailed Statement of Investments made by the
Union / State Governments
Name of
N
the
o
con
cer
n
2
Details of investment
Total
am
ou
nt
3
4
5
6
Net paid
up
cap
ital
Net worth/
net
asset
Liabil
ity
positi
on
Market
value
of
invest
ment/
Fair
Value
Net
7
8
9
10
pro
fit/
los
s
Amount of
divid
end
receiv
ed
and
credit
ed to
Gove
rnment
durin
g the
year
Amount of
Divid
end
Decla
red
11
12
►
Section- 2 : Major and Minor Head wise Details of
Investments
Major Head
Minor Heads
Balance on
April 1,
20X0
Invest-ments
During
the year
Disinvestment
during
the year
Balance on
March
31,
20X1
Net Increase/
decreas
e
during
the year
(3-6)
Divident
Receiv
ed
1
2
3
4
5
6
7
8
Additional Disclosures
►
Fresh Investments made during the year
( In lakhs of
rupees)
Investee
Entity
1
Investment
disinvestment
Type of units
Number of units
Total amount
invested
Type of units
Number of
units
2
3
4
5
6
Total amount of
disinvestment
7
►
Fresh Investment made during the year in those entities which
suffered a net loss during the last year
Name of the
Investee
Entity
1
Investment made during the year 201011
Amount of Investment as on
March 31, 2011
Type of
Un
it
Number
of
units
Total
amo
unt
Type of
uni
ts
Numbe
r
of
uni
ts
Total
am
ou
nt
2
3
4
5
6
7
Net loss
du
rin
g
20
10
20
11
Resons for
inves
t
ment
durin
g
2010
-11
8
9
Indian Government Accounting
Standard-10
Public Debt and Other Liabilities of Governments:
Disclosure Requirements
Introduction
1. In terms of Article 292 of the Constitution, the executive
power of the Union extends to borrowing upon the security
of the Consolidated Fund of India within such limits, if any,
as may from time to time be fixed by Parliament by Law.
Article 293(1) of the Constitution provides a similar
provision in respect of State Governments. Section 48A(1)
of the Government of Union Territory Act 1963 and Section
47A(1) of Government of NCT of Delhi Act 1991, also
provides for borrowing upon the security of the
Consolidated Fund of the Union Territory concerned or
Consolidated Fund of the Capital within such limits, if any,
as may be fixed by Parliament by law and the stipulations
indicated therein.
►
►
►
► Objective
► 2.
The objective of the IGAS is to lay down the
principles for identification, measurement and
disclosure of public debt and other obligation of
Union and the State Governments including
Union Territories with legislatures in their
respective financial statements. It ensures
consistency with international practices for
accounting of public debt in order to ensure
transparency and disclosure in the financial
statements of Government for the benefit of
various stake holders.
► Scope
►
3. The proposed IGAS shall apply to the
financial statements prepared by the
Union and State Governments and Union
Territories with legislature. The IGAS shall
also cover “other obligations” as defined in
paragraph 4 of this Standard relating to
definitions. The IGAS shall not include in
its ambit, guarantees and other contingent
liabilities and non-binding assurances
► Definitions
►
►
►
►
►
►
►
►
►
4. The following terms used in this standard shall have the meaning as specified
hereunder, unless the context otherwise requires:-
Accounting Authority means the authority who prepares the Financial
Statements of the Governments.
Accounting Period means the period covered by the Financial Statements.
Cash Basis of accounting is that wherein accounting transactions of the
Union Government, State Government and Government of Union Territory
with legislature represent the actual cash receipts and disbursement
during a financial year as distinguished from the amounts due to or by the
relevant Government, subject to the exceptions as may be authorized
under the Government Accounting Rules 1990 or by any general or special
orders issued by the Central Government on the advice of the Comptroller
& Auditor General of India.
Consolidated Fund of India is the fund referred to in Article 266(1) of the
Constitution of India.
Consolidated Fund of a State is the fund referred to in Article 266(1) of the
Constitution of India.
Consolidated Fund of Union Territories with Legislature is the fund
referred to in Section 47(1) of the Union Territories Act, 1963 and Section
46(1) of the Government of National Capital Territory of Delhi Act, 1991.
Public Account of India is the fund referred to in Article 266(2) of the
Constitution of India.
Public Account of a State is the fund referred to in Article 266(2) of the
Constitution of India.
►
►
►
►
►
►
Public Account of Union Territory is the Public Account
referred to in Section 47A (1) and Section 46A (1) of the
Government of Union Territories Act, 1963 and the
Government of National Capital Territory of Delhi Act, 1991
respectively.
Financial Statements means the Annual Finance Accounts of
the Union Government, State Governments and Union
Territories with legislature. It would also include
appropriate statements, schedules and notes to the above
statements.
Government means the Union Government or any State
Government or Government of any Union Territory with
Legislature.
Face Value is the contract value of the Public Debt or other
obligations.
Public Debt includes internal and external debts of the
Central Government, State Governments and Government
of the Union Territory with legislature, as applicable.
“Other obligations” refers to the net outcome of the receipt
and payment transactions arising in the public account. It
does not include transactions categorized as Remittances,
Suspense and Miscellaneous and Cash Balance
► Measurement
& Valuation
► 5. The Public Debt and Other Obligations
incurred by Governments shall be
accounted and reported on the basis of
Face Value. For the purpose of reporting
external debt, changes in the Balance at
the end of the Accounting Period arising
from variations in the rate of exchange
shall also be reported
►
►
►
►
►
Disclosure
6. The financial statements of the Union Government,
State Governments and the Union Territories with
legislature shall disclose the following details concerning
Public Debt and other obligations:(a) the opening balance, additions and discharges during
the year, closing balanc3e and net change in rupee
terms with respect to internal debt;
(b) the opening balance, additions and discharges during
the year, closing balance and net change in rupee terms
with respect to external debt, wherever applicable;
(c ) the opening balance, receipts and disbursements
during the year, closing balance and net change in rupee
terms with respect of other obligations.
►
►
►
►
►
7. The Financial Statements of the Union Government and the State
governments shall disclose the following details regarding servicing of
debt and related parameters for the current year, preceding year and
net change in rupee terms with respect to –
(a) Interest paid by the governments on public debt, small saving,
provident funds, and reserve funds and on other obligations.
(b) Interest received on loans to State and Union Territory
Governments, departmental Commercial Undertakings, PSUs and
other Undertaking including Railways, Post & Telegraph.
(c ) Interest received on other Loans, from investments of cash
balances and other items.
8. External debt of the Central Government shall be classified
according to source indicating the currency of transaction.
Measurement of face value shall be in respect of both the currency
of agreement and Indian rupees. It should also disclose the
outstanding in terms of exchange rate prevailing at the end of the
accounting period.
► Effective
date
► 9. This Indian Government Accounting
Standard becomes effective for the
Financial Statements covering periods
beginning on 1st April of the year after the
notification of the Standard by the
Government.
► Format
for disclosure
10. The formats for the disclosures in the
form of Tabular Statements indicated in
Annexure 1 are illustrative in nature. The
purpose of these Statements is to
illustrate the application of the Standard to
assist in clarifying its meaning. The use of
the formats in the same form in Finance
Accounts is not envisaged.
STATEMENT NO.1
SUMMARY OF DEBT POSITION
► (a)
Statement of Public Debt and Other Liabilities
►
Name of borrowings
1
PUBLIC DEBT
Consolidated Fund
Internal Debt
Market Loans
Treasury Bills
Securities issued to International Fincnail
Institutions
Bonds
Ways and Means Advances
Special Central Government
Specurisies againse Small Savings
Others
External Debt*
Loans from Foreign countries
Loans from Multilateral Agencies and
other Institution
Others
OTHER LIABILITIES
Publice Accounts
Small Savings, Provident Funds, etc.
Reserve Funds bearing interest
Reserve Funds not bearing interest
Deposits bearing interest
Deposits not bearing interest
Balance as 1st
April 2011
Receipt during
the year
Repayments during
the year
Balance as 1st
March 2012
2
3
4
5
Net
Increase /
Decrease
(in Rs.)
6
►
Statement showing Servicing of Debit and related
parameters
(1) Interest paid by Government(a) On Public Debt and Small Savings, Provident Funds
(b) Interest on Reserve Funds
(c) On other Obligations
GROSS INTEREST
(B) Deduct
(a) interest received on loans to save and Union
Territory Governments.
(b)
Interest
from
Departmental
Commercial
Undertakings, Public Sector Undertakings and
other undertakings including Railways and Posts
and Telegraphs.
(c) Interest received on other loans, from investment
of cash balances and other items,
NET INTEREST
Percentage of gross interest to the total revenue
receipts……………………….
Percentage of net interest to the total revenue
receipts………………….
2011-12
2010-11
Net
Increase
Decrease
(in Rs.)
/
STATEMENT NO.2
Statement showing details of Foreign Loans
►
Sl.No
Name of Country /
Institutions
(Foreign
currency
indicated in
brackets)
Outstanding
balanc
e on
01/04/
2011
Additions
during
201112
Repayment
during
20112012
Outstanding
balance
as on
31/03/2
012
( Donor Currency in thousands at Historical Value)
1-
(Austria (Euro) etc
TOTAL
Outstanding
balanc
es as
on
31.03.
2912
(In
crores
of
rupees
)
Oustaing
balanc
es as
on
31.03.
2012 (
In
crores
of
rupees
)
(Expressed
in
terms
of
Histori
cal
Value)
(Converted
at
Curren
t
Exchan
ge
Rate)
Exchange
Rates
adopte
d
31/03/
2012
Major/Minor head of account
PART I - CONSOLIDATED FUND
Receipt Heads (Revenue Account)(A) Receipt
Heads (Capital Account)(A)
Expenditure Heads (Revenue Account)(A)
Expenditure Heads (Capital Account)(A)
TOTAL - E - Public Debt
F — Loans and Advances
G — Inter-State Settlement
7810 - Inter-State Settlement
TOTAL — Consolidated Fund
PART II — CONTINGENCY FUND
8000 - Contingency Fund III 1
Opening
balance as
on
1.4.20x1
Receipt
Disbursement
Closing balance as on
31.3.20x2
PART III — PUBLIC ACCOUNT
I — Small Savings, Provident Funds etc.,
J — RESERVE FUNDS —
(a) — Reserve funds bearing Interest —
8115 - Depreciation/Renewal Reserve Funds, etc.
►
N — Reserve Funds Bearing Interest
TOTAL
(b) - Reserve Funds not Bearing Interest
8223 - Famine Relief Fund, etc.
TOTAL — Reserve Funds Not Bearing Interest
TOTAL — J — Reserve Funds
K—DEPOSITS AND ADVANCES—
(a) — Deposits bearing Interest—
8336 - Civil Deposits, etc.
TOTAL — DEPOSITS BEARING INTEREST
(b) - Deposits not bearing interest
8443 - Civil Deposits, etc.
TOTAL — DEPOSITS NOT BEARING INTEREST
(c) - Advances
TOTAL — Advances
TOTAL — K — DEPOSITS AND ADVANCES
L — SUSPENSE AND
MISCELLANEOUS (a) — Coinage Accounts
8656 - Coinage Accounts, etc.
►
TOTAL
—MCoinage Accounts
(b) — Suspense
8658 - Suspense Accounts, etc.
TOTAL — Suspense
(c) — Other Accounts
8670 - Cheques and Bills, etc.
TOTAL — Other Accounts
(d) — Accounts with Governments
8679 - Accounts with Governments of other Countries, etc.
TOTAL — Accounts with Governments of foreign countries
(e) — Miscellaneous
8680 - Miscellaneous Government Account, etc.
TOTAL — Miscellaneous
TOTAL — L — SUSPENSE AND MISCELLANEOUS
M — REMITTANCES
(a) — Money Orders and other remittances
8781 - Money Orders, etc.
TOTAL — Money Orders and Remittances
(b) — Inter-Government Adjustment Account
8786 - Adjusting Account between Central and
State Government
(c) — Exchange Accounts
8797 - Exchange Accounts, etc.
TOTAL - M - REMITTANCES
TOTAL - Public Account
N - CASH BALANCE
8999 - Cash Balance, etc.
TOTAL - N - CASH BALANCE
GRAND TOTAL
► STATEMENT
NO-4
STATEMENT OF DEBTS AND OTHER INTEREST BEARING OBLIGATIONS OF
GOVERNMENT
Description of Loans
Amount on 1st
April,
20x1
Additions
during
the year
Discharges
during
the year
Amount on 31st
March,
20x2
Interest paid
on
Public
debt
1
2
3
4
5
6
E - PUBLIC DEBT
6001- Internal Debt of the Union
Government 101 - Market Loans
1.
Market loans bearing interest
2.
Market loans not bearing
interest
3.
Market Loans Suspense
Account
103 - Treasury Bills and connected
Securities issued to R.B.I., etc.
6002- External Debt 202 - Loans
from the Federal Austrian
Government, etc.
TOTAL - PUBLIC DEBT
► STATEMENT
NO.5
DETAILS OF MARKET LOANS RAISED IN INDIA AND SECURITIES
ISSUED TO INTERNATIONALFINANCIAL INSTITUTIONS
Details Loans and Securities
When raised
Amount on 1st
April,
20x1
Additions
during
the year
Discharges
during
the year
1
2
3
4
5
E - PUBLIC DEBT A — Internal Debt
of the Union
Government
1.
Market Loans
(a) Market loans bearing interest etc.
(i)
Treasury Bills and Connected
Securities issued to RBI —
(ii) 364 days Treasury Bills
182 days Treasury Bills
Securities issued to the International
Financial Institutions
(iii) Special Securities issued to RBI
etc.
Etc.
TOTAL
Amount on
31st
March,
20x2
6