Funds crunch, but state can't spend

The Karnataka government, like most state governments, is perennially short of funds but seems unable to spend a good part of what is allocated to it.

What is worse, is not all of what is indicated as spent is actually spent and a part of what is not spent is not surrendered. Worst of all, over a three year period, in excess of Rs 1,000 crore has been spent without the legislature's permission.

The Karnataka government saved Rs 4,204.72 crore, which works out to as much as 15 per cent of the grants passed by the legislature for expenditure during 2002-03, but cannot explain how.

When the controlling officers were asked to explain the significant variations, explanations were not received, says the report of the Comptroller and Auditor General of India (Civil) for the year-ended March 31, 2003.

Even a part of the amount indicated as spent was not actually spent. The total expenditure, according to the CAG report, stands inflated at least by Rs 309.93 crore.

A reason for this is that Rs 49.23 crore relating to the Karnataka Power Transmission Corporation Ltd and Bangalore Mass Rapid Transport Ltd, transferred from the consolidated fund through book adjustment, was retained in the public account of the state without being released to the concerns.

Also, Rs 12.09 crore was drawn on abstract contingent bills for which detailed contingent bills were not received as of March, 2003.

The report adds that in 60 grants, explanations for savings in 801 cases and excess in 455 cases were not furnished by the departmental officers.

"Further, scrutiny of surrender orders issued by the finance department revealed that there were savings due to non-release of funds/non/short release of funds. In 30 grants, expenditure fell short by over Rs 10 crore and also by more than 10 per cent of the total provision," observes the report.

"The overall savings of Rs 4,204.72 core was the net result of savings of Rs 5,295.68 crore in 62 grants and appropriations offset by an excess of Rs 1,090.96 crore in eight grants / appropriations. Explanations were not received to the savings / excesses sent to the controlling officers on the significant variations," the report said.

In fact, the report also says that of the total savings of Rs 5,271.28 crore in 86 cases involving 57 grants / appropriations, only Rs 892.86 crore was surrendered on the last day of the financial year, leaving a balance of Rs 4,378.42 crore unsurrendered.

An appropriation accounts report is prepared annually to indicate the capital and revenue expenditure on various specified services vis-a-vis those authorised by the Appropriate Act in respect of both charged and voted items of the budget.

As per Article 205 of the Constitution of India, it is mandatory for a state government to get the excess over a grant/appropriation regularised by the state legislature.

However, the report identifies that excess expenditure of Rs 1,104.19 crore for the years 1989-02 had not been regularised so far. The report terms this as a breach of legislative control over appropriations.