CAG flays govt for unrealistic expenditure estimates

Supplementary provisions exceeded the original provision by as much as 239,900% in 2014-15, in case of ministry of petroleum

The Comptroller and Auditor General of India (CAG) has picked holes in the budgetary projections for expenditures made by various government departments for 2014-15, saying the projections were substantially underestimated compared with the supplementary grants obtained on account of ‘unrealistic expectations’.

In its report tabled in Parliament on Tuesday, the CAG said supplementary provisions exceeded the original provision by as much as 239,900 per cent in 2014-15, in case of ministry of petroleum and natural gas, which projected only Rs 1 crore expenditure at the time of the Budget. Similarly, the supplementary provision of the revenue department was 1,518 per cent higher than its initial projection of Rs 726.88 crore, against Rs 11,033 crore in the additional provision.

“Large supplementary provisions indicate the ministries and departments did not prepare estimates of expenditure on a realistic basis and that the mechanism of holding pre-Budget meetings and scrutiny by the ministry of finance for ensuring realistic budgetary projections did not have the desired effect,” the CAG noted.

Earlier this month, finance minister Arun Jaitley had submitted for Parliament's approval supplementary demand for grants to the tune of Rs 56,256 crore.

"The practice of the supplementaries during the fiscal year in addition to the main Budget undercuts the sanctity of budgetary provisions," the CAG said. It added the supplementary budget should normally be for unexpected items of expenditure or schemes taken up for 'compelling public interest'.

The CAG also raised cash supplementary provisions aggregating to Rs 546 crore were obtained in 2014-15, but in four cases the final expenditure was even less than the original provisions, suggesting the unutilised cash supplementary provision was unnecessary, 'indicative of deficient budgeting.'

"Instead of obtaining cash supplementary, the ministries should have explored the possibility of utilising the savings available within the grant by obtaining token or technical supplementary to avoid savings at the end of the year," it noted.

The department of economic affairs, for instance, ended the year with savings worth Rs 885 crore, while the ministry of road transport and highways had savings of Rs 1,430 crore.

The CAG also said various departments and ministries incorrectly classified revenue expenditure as capital expenditure and vice-versa, resulting in an overestimation of capital expenditure by Rs 225.76 crore.

The auditor also pulled up the Centre for 'deficient' monitoring of expenditure as utilisation certificates (UCs) were not obtained in 37,569 cases totalling expenses of Rs 51,527 crore as of end-March.

Utilisation certificates are a mechanism for the ministries to verify the money has been utilised for the purpose for which it was given.

"In 26 ministries/departments, 37,569 UCs involving Rs 51,527.1 crore which were due on March 31, 2015 were outstanding, which indicates deficient monitoring and follow-up mechanisms in the ministries/departments concerned," the report noted.