Finance Ministry red-flags CSS fund mis-utilisation by Chhattisgarh govt

Says Rs 1,213 cr being spent in violation of rules and Rs 11 cr diverted to time deposits to earn interest income; calls for action against officers responsible

The finance ministry has raised concerns about violation of guidelines by the Chhattisgarh government in the utilisation of funds transferred to the state for centrally sponsored schemes (CSS).

In two separate letters to the Chhattisgarh chief secretary last month, Union Finance Secretary T V Somanathan said action should be initiated against officers responsible, if necessary.

The union finance ministry has claimed that Rs 1,213 crore has not been transferred to the Single Nodal Agency (SNA) accounts and the expenditure is being incurred directly from the state treasury in violation of union Finance Ministry guidelines. It also pointed out that over Rs 11 crore has been diverted from SNA accounts to time deposits to earn interest income.

With a view to bring more efficiency in the public expenditure management, the union Finance Ministry in March last year established new procedure of fund flows to states under CSS.  According to this notification, all expenditure under CSS is to be incurred from the dedicated SNA accounts only, in order to prevent states from diverting such funds and earning interest by parking such funds in fixed deposits.

Every state government was asked to open a SNA for each CSS in a Scheduled Commercial Bank authorized to conduct government business. In case of umbrella schemes which have multiple sub-schemes, if needed, the state governments were allowed to designate separate SNAs for each sub-scheme.

“An analysis of the data of transactions from the SNA account has revealed that from several SNA accounts in your state(s), CSS funds have been diverted to fixed/other deposits in violation of DoE’s (Department of Expenditure’s) guidelines dated March 23, 2021. You are requested to issue strict instructions to revert back these funds to SNA accounts immediately and, if appropriate, initiate action against the officers concerned for violation of the instructions,” Somanathan said in one letter, dated November 14.

In another letter written the same day, Somanathan wrote: “An analysis of data shared by your state regarding release/expenditure of CSS funds from the state treasuries has revealed that a substantial portion of funds are being transferred to the SNA account and the expenditure is being incurred directly from the state treasuries in violation of DoE’s guidelines.”

“You are requested to stop direct expenditure of CSS from the treasury forthwith, and if appropriate, initiate action against the officers concerned responsible for the violation of the instructions. Henceforth, we will not treat expenditure incurred in violation of DoE’s guidelines as valid CSS,” Somanathan further added.

Business Standard has reviewed copies of both the letters. The finance ministry of Chhattisgarh government on its part has sent the letters for “necessary action”.

An email sent to the Chhattisgarh chief secretary didn't elicit a response till the time of going to press.

THE ISSUE IN POINT

• FinMin claims that CSS funds in Chhattisgarh have been diverted to fixed/other deposits in violation of expenditure department’s norms
• Around Rs 1,213 crore not been transferred to Single Nodal Agency accounts and the expenditure being incurred directly from state treasury
• Over Rs 11 crore diverted from SNA accounts to time deposits to incur interest income
• Union finance secretary has written twice to Chhattisgarh, asking for action against officers responsible, if necessary
• Chhattisgarh finance ministry has sent the letters for “necessary action”