 "CAG points out flaws in Gujarat govt's financial management")
The Comptroller and Auditor General of India (CAG) has pointed several flaws in the financial practices of the Gujarat government and suggested that the state formulate "realistic budgets based on reliable assumptions of the needs".
The "State Finance Audit Report of the CAG for the year ended March 31, 2020" was tabled on the floor of the Gujarat Assembly on Tuesday, the last day of the two-day Monsoon Session.
"As per Gujarat Budget Manual-1983, no expenditure can be incurred under any Head without budget provision or in anticipation of a supplementary grant or appropriation....in two cases, expenditure in excess of Rs 1 crore was incurred (totalling Rs 11.07 crore) during 2019-20 without budget provision," the CAG noted.
Expenditure without budget provision is a violation of financial regulations as well as "the will of the Legislature" and indicates "lack of financial discipline", the CAG said.
The national auditor also found out that the government's accounts do not reflect funds flow of 14,273 Gram Panchayats, such as opening balances, receipts and disbursements.
This means these Gram Panchayats were maintaining their accounts in Scheduled Banks (outside Government Accounts), it said.
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The government has no mechanism to ascertain the quantum of unutilised funds lying in the accounts of these Panchayats," said the CAG.
The auditor also took note of delay in the submission of Utilisation Certificates (UCs) for the Grant-in-aid (GIA).
"State Government authorities who have received conditional GIA are required to furnish UCs to the Head of the Departments.....scrutiny revealed that 2,807 UCs in respect of GIA aggregating Rs 4,403.39 crore given to 21 departments during 2001-02 to 2018-19 had not been submitted," the report pointed out.
As much as 49 per cent of outstanding UCs pertained to years 2001-02, 2002-03 and 2003-04, it said.
"It is a matter of concern that the departmental authorities have not yet explained as to how Rs 4,403.39 crore were spent over the years," the CAG said, adding that in the absence of UCs, there is no assurance that money disbursed has been used for the same purpose.
GIA constituted around 37 per cent of the state's total expenditure in the last five years (2015-20), which is significant, the report said.
Another important lacuna pointed out by the CAG was about "significant savings under Centrally Sponsored Schemes (CSS)."
Planning for CSS should be made in such a way that funds are optimally utilised, but during 2019-20, CAG found mismatch between the provisions made and expenditure incurred, leading to substantial savings, the report said.
The percentage of savings ranged between 22 and 100 under four sub-heads. In some cases, where Central contribution was 100 per cent, the department incurred only 37 per cent expenditure. This showed that planning for execution of CSS was not adequate, said the CAG.
The auditor also found that the finance department was releasing grant-in-aid to various state boards and corporations "without verification of Accounts, Utilisation Certificates, etc."
"The Department needs to strengthen its internal controls to ensure that GIA are spent timely for the purpose these were released, and subsequent GIA should be released only on receipt of Audited Accounts and Utilisation Certificates," it said.
Among the CAG's recommendations are formulation of "realistic budget based on reliable assumptions of the needs of the departments and their capacity to utilise the allocated resources" and keeping check on excess expenditure.
The government should ensure that controlling officers are made accountable for variations in expenditure from the allocation in order to facilitate proper analysis of budget and preparation of meaningful appropriation accounts, it said.
Other recommendations included adoption of good practices of the Central government and bringing in appropriate control mechanism to enforce proper implementation and monitoring of budget to ensure that savings are curtailed.