CAG in a report also said that dependence of the state government on high interest rate bearing market loans was on increasing trend to fund its expenditure instead of improving states own revenue resources to generate development funds.

"The overall fiscal liabilities of Jammu and Kashmir state have increased from Rs 40,265 crore in 2012-13 to Rs 44,673 crore by the end of March 31, 2014," informed the CAG report for the
year ended March 31, 2014.

The fiscal debt situation had deteriorated in comparison to the previous year and the state should make urgent efforts to reduce its fiscal liabilities and deficit, the report, tabled in the Jammu and Kashmir Legislative Assembly, said.

The state also acts as banker and trustee in respect of deposits like small savings collections, provident funds and deposits, the CAG noted.

The fiscal liability as a ratio of the gross state domestic product (GSDP) was 51.2 per cent at the end of the March 31, 2014, CAG cited.

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