The Comptroller and Auditor General of India (CAG) has pointed towards several flaws in the financial practices of the Gujarat government and suggested formation of ‘State Finance Commissions’ and the adoption of a control mechanism to enforce proper implementation and monitoring of the state budget. The ‘State Finances Audit Report of the CAG for the year ended March 31, 2023’ was tabled in the Gujarat assembly on Friday, the last day of the three-day long monsoon session.
‘Nirbhaya Fund Underutilised’
The CAG report revealed significant underutilisation of the Nirbhaya Fund, which was established by the central government to enhance the safety and security of women. According to the audit, Rs 143.75 crore was recorded as committed liabilities, with Rs 25 crore remaining unspent at the Ahmedabad Municipal Corporation and Rs 118.75 crore held by Gujarat State Financial Services Ltd. Moreover, Rs 57.66 lakh designated for the Cyber Crime Prevention scheme remained unused as of March 2023, despite a lapse of up to five years.
“The state government needs to formulate a realistic budget based on the needs of the departments and their capacity to utilize the allocated resources. An appropriate control mechanism may be instituted by the government to enforce proper implementation and monitoring of budget so that large savings within grant or appropriation are controlled,” said the report.
Financial Management Flaws
The report identified several flaws in the financial practices of the Gujarat government. It noted an excess expenditure of Rs 64.48 crore across five grants for the 2022-23 fiscal year, which violated legislative provisions and indicated poor planning. The CAG also highlighted persistent excess expenditure under the sub-head for superannuation and retirement allowances to panchayat employees, with a deviation of nearly Rs 500 crore between 2018-19 and 2021-22.
“Despite Public Accounts Committee’s recommendations to minimize the cases of excesses, persistent excesses were noticed in one grant. The persistent excess expenditure indicates that the budgetary control in the department was ineffective and budget estimates were not prepared on realistic basis. Such repeated excess expenditure is in violation of the will of the state legislature,” it said.
“Excess expenditure should be viewed seriously because not a single rupee can be spent without legislative authorization,” it added.
Recommendations for Improvement
The report called for the creation of State Finance Commissions as mandated by the Constitution to provide recommendations on financial management and ensure their implementation. It also suggested that the state government review and address reasons for insufficient returns on investments by statutory corporations, government companies, and cooperative banks. Additionally, the report emphasised the importance of completing projects promptly to ensure timely benefits to beneficiaries.
Public Sector Undertakings
Regarding State Public Sector Undertakings (SPSUs), the CAG found that out of 101 SPSUs in Gujarat, 69 had delayed financial statements, with 188 accounts in arrears. The majority of the state’s total profit and loss were concentrated in a few SPSUs, underscoring the need for targeted reforms.
“Audit noticed that the prescribed timelines regarding submission of Financial Statements were not adhered to by 69 SPSUs whose 188 accounts were in arrears. Out of the total profit of Rs 9,927.30 crore earned by 63 SPSUs, 94.38 per cent was contributed by 10 SPSUs only. Out of total loss of Rs 2,456.98 crore incurred by 30 SPSUs, loss of Rs 2,276.72 crore was incurred by six SPSUs,” the report stated.
The report urged the state government to review and address the functioning of loss-making SPSUs and to make decisions regarding inactive companies.
(With PTI inputs)
