Gujarat: CAG report flags financial management flaws, bats for 'state finance commissions'

Gandhinagar, Aug 23 (PTI) The Comptroller and Auditor General of India (CAG) has pointed towards several flaws in financial practices of the Gujarat government and suggested formation of 'State Finance Commissions' and 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.

"The state government may constitute 'State Finance Commissions' as per the time frame prescribed in the Constitution. Recommendations made by the Commissions may be considered and those accepted by the state government be implemented in a time-bound manner," the CAG recommended in the report.

The report further opined that the state government should assess the reasons for insufficient return on investment for statutory corporations, government companies, cooperative banks and societies and come up with remedial measures.

The state government must also take effective steps to complete all the projects expeditiously so that the intended benefits reach the beneficiaries without further delay, the report said.

During 2022-23, there was excess expenditure of Rs 64.48 crore in five grants or appropriation, noted the CAG, adding that this was not only in contravention of the provisions requiring legislative sanction but also indicative of bad planning.

These could be avoided by keeping track of expenditure progression with budget made for the purpose, said the report.

The national auditor also expressed concern about "persistent excess expenditure', which it said was observed under the sub-head 'Superannuation and Retirement Allowances to panchayat employees and Family Pension to panchayat employees'.

As against grant, the expenditure was in access of nearly Rs 500 crore between 2018-19 to 2021-22. It was in excess of Rs 61.70 crore in 2022-23, it said.

"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.

The state government needs to maintain a robust database of Panchayat employees due for superannuation in order to estimate the retirement benefits accurately, the CAG suggested.

"Excess expenditure should be viewed seriously because not a single rupee can be spent without legislative authorization," it added.

While going through the accounts of 2022-23, the CAG found that savings under nine grants and four appropriations amounting to Rs 528.99 crore were not surrendered at all.

Taking note of misclassification of capital expenditure as revenue expenditure, the CAG said, "An original provision of Rs 789.57 crore was made and an expenditure of Rs 335.17 crore was incurred under revenue major heads instead of capital major heads." The CAG also flagged the under utilization of Nirbhaya fund scheme in Gujarat. The Nirbhaya Fund was set up the Centre for utilisation in projects specifically designed to improve the safety and security of women. It has two components, namely 'Safe City Project' and 'Cyber Crime Prevention against Women and Children'.

"Audit observed that out of Rs 143.75 crore shown as committed liabilities, Rs 25 crore was lying unspent with Ahmedabad Municipal Corporation and the remaining 118.75 crore was parked with Gujarat State Financial Services Ltd. Similarly, for the second scheme, Rs 57.66 lakh remained unutilized as of March 2023 even after a lapse of three to five years," said the CAG.

"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.

On the working of State Public Sector Undertakings (SPSUs), the CAG pointed out that as on 31 March 2023, there were 101 SPSUs in Gujarat.

These comprise four Statutory Corporations and 65 Government Companies, of which 11 are inactive, and 32 Government Controlled Other Companies, the CAG report informed.

"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.

It said the state government must review the functioning of all loss-making SPSUs and issue necessary instructions to administrative departments to set targets for individual SPSUs to furnish the FSs in time and to strictly monitor the clearance of arrears.

The state government must review the inactive government companies and take appropriate decisions on their revival or winding up, it added. PTI PJT PD BNM