Report identifies misclassification of expenditures and investment, and lack of transparency
Report identifies misclassification of expenditures and investment, and lack of transparency
The Comptroller and Auditor General (CAG) has questioned discrepancies in the budgeting practices of the State government, asserting that the latter needs to be more “realistic” in its budgetary assumptions and ensure efficient control mechanisms.
In its State Finances audit report for the year ended 2021, the CAG identified instances of misclassification of expenditures and investment, lack of transparency, excess and unnecessary re-appropriation of funds and failure to execute schemes among the practices which needed correction.
Benefits go awry
Several schemes for which budgetary provision was made were not executed, depriving the public of the intended benefits, the CAG found. Such savings, the CAG observed, deprive other government departments of funds which they could have utilised instead.
The audit observed that “a Budget provision of ₹10 crore and above was made in 19 schemes included in 11 grants but no expenditure was incurred in any of these schemes. These schemes were also not withdrawn in the revised outlay. Out of these 19 schemes, two schemes such as National Scheme for modernisation of Police and other forces, Basic Amenities in Village Offices were announced in the Budget for financial year 2019-20 too with no actual funding.”
It also noted indiscriminate classification of expenditure, amounting to a total ₹2,236.30 crore, under ‘Other charges’ when they should have been marked under specific object heads. Such practices leave the accounts ”opaque,” according to the CAG.
While separate standard object heads exist for machinery and equipment, materials and supplies, motor vehicles, rent rate and taxes, electricity charges and water charges, these expenditures were budgeted/booked under the ‘Other Charges’ during 2020-21.
Misclassification
The audit report cites cases of misclassification of expenditures and investment. In one instance in 2020-21, ₹46.50 crore spent on gratuity in the Kerala State Cashew Development Corporation (KSCDC) was classified as capital expenditure when it should have been marked under revenue expenditure.
The discrepancy had been noted in 2019-20 also and pointed out, but the same thing occurred the following year. This is inconsistent with the principles laid down in the Indian Government Accounting Standards, the CAG noted.
Further, the audit noted instances where the sanctioned supplementary demand for grants was unnecessary. In such cases, either the final expenditure did not come up to the level of the original Grants or no expenditure was incurred even after obtaining the Supplementary Grants.
Taking note of these discrepancies, the CAG has recommended the State government “to formulate a realistic Budget based on reliable assumptions of the needs of the departments and their capacity to utilise the allocated resources.”
On the bright side, the CAG has commended the government for the fact that in 2020-21 there was no low Budget utilisation of less than 50% in any of the grants, which was observed in seven grants in 2019-20.
