Over 90 per cent of this subsidy was absorbed by the food and fertiliser sectors, while the rest was on account of interest subsidy, railway subsidy, export promotion assistance and debt relief to farmers.

The total explicit subsidy on fertilisers in 1996-97 was Rs 8,600 crore (53 per cent of the total subsidy). Subsidy on indigenous fertlisers was Rs 4,743 crore (29 per cent), on imported fertlisers it was Rs 2,184.45 crore (13.5 per cent), and Rs 1,671.77 crore (10 per cent) was paid for concessional sale of decontrolled fertlisers.

The subsidy on imported fertlisers exceeded the Budget estimates by 33 per cent, the report notes. The subsidy on food in 1996-97 was Rs 6,066 crore (37 per cent).

Implicitsubsidies, paid in to state governments on small savings loan of the central government, increased to Rs 1,477 crore in 1996-97. ``The gap between interest receipt and interest payments (on these loans) assume the nature of a subsidy to the state governments,'' the CAG report said.

``It would be desirable for Union government to fix the rate of interest as loans to state governments against small savings collection in such a manner... That no hidden subsidies are provided,'' it added.

Bengal govt draws flak: The Comptroller and Auditor General (CAG) of India has severely criticised the West Bengal government for its failure to monitor personal ledger (PL) accounts.

In the CAG report for the year ended March 31, 1997, it stated that there was "no monitoring by government of withdrawals out of PL accounts and expenditure therefrom by drawing and disbursing officers." The report further stated that "appropriate returns by the drawing and disbursing officers to the controlling officers were not prescribed",adding that "there was no system of regular inspection of the expenditure out of pl accounts".

According to West Bengal treasury rules, personal deposit accounts created by debiting the consolidated fund of India would have to be closed at the end of the year by crediting the balance to the relevant service heads in the consolidated fund and similar PL accounts could be opened in the following year.

However, the CAG report stated that such accounts opened by debiting the consolidated fund were not closed at the end of the year, as required by the treasury rules.

The CAG report launched a scathing attack on the government's failure to maintain a record of transactions under the PL accounts.