Lion's share of unspent balances is with social sector ministries: CGA data

Merely bumping up money to spend will not lead to faster utilisation; CGA has identified a host of reasons for balances lying idle, not least of which is the pandemic

There have been numerous commentaries about the possible under-funding of social sector priorities in Budget FY22, but data on the actual pace of utilisation of the money by some key ministries and state governments show the problem lies elsewhere. 

Data from the Controller General of Accounts (CGA) shows that some of the highest unspent balance with the ministries or departments are usually from these sectors. Take the department of health and family welfare, for instance. About 33 per cent of the sum in its purse in FY21 was unspent. For the undivided department of agriculture, cooperation & farmers' welfare, the figure was over 19 per cent. Most significantly, the unspent balance with the various state governments was also quite substantial. 

Now these are not time series data but those of just one year. However, any study of the longitudinal data will show the same trend. 

Yet, it is also true that the departments and the states have begun to show a much higher level of utilisation of their budget estimates. What is happening here? 

The data with the CGA shows the actual level of appropriation of money to the various departments and states from the Consolidated Fund of India, through the year. This data, available as Finance Accounts, on the CGA website is a record of the actual money made available to all the concerned entities from the current year’s budget and also at times from the past year, if a rollover is allowed. The data takes into account the actual expenditure made by the user entities till the same is placed before Parliament, each year. 

The Budget numbers tabled in Parliament are the revised estimates, in other words the sum the departments reckon they shall be able to spend in the financial year with about a quarter yet to go. The CGA data is on the other hand a post mortem after the spends have actually got done and the receipts reconciled. It therefore shows how efficiently the user entities are making use of the money. 

As Table 1 shows, in FY21, Parliament approved a total provision of Rs 10,981,793 crore, about 16 per cent higher over the previous year for close to a hundred grants for the departments and ministries. When the CGA totted up the actual spend by these entities, it found the actual expenditure had undershot by close to 10 per cent. In absolute numbers it was Rs 10,35,638 crore. 

Leaving those considerations aside, the data shows that just bumping up money to spend by the various departments, especially in the social sectors, will not lead to faster utilisation. 

For instance, in health the CGA notes the following reasons for the underspend. “Due to delay in procurement of supplies owing to Covid-19 pandemic, availability of unspent balances of previous year, non-implementation of schemes by some states owing to spread of Covid-19 pandemic, reduction of provision for transfer of funds to National Investment Fund at revised estimates stage by the Ministry of Finance and non-finalisation of accounting procedure in respect of transfer to Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN),” it says. 

The CGA data does not offer further details of how much each of the problems noted above had led to the under-spend. Yet, a perusal shows there is no single reason for the money lying unspent. Each of the reasons enumerated show a lack of capacity within the department—for instance, the “availability of unspent balance from the previous year” shows that it is not the absence of funds but the delay a government apparatus creates in usage of public money in terms of issuing tenders, receiving response, quality checks, etc which make it difficult for such departments to spend all their money as rapidly as those are made available.

Or take the case of the department of agriculture and farmers welfare. The data set notes: “Due to non-receipt of data from States/UTs, receipt of less proposals from the implementing agencies and registration of less farmers under Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and receipt of less proposal from State Governments/implementing agencies for Central Assistance under various schemes (sic)."

These are clearly issues of centre and state coordination. But the result is in the Covid affected year a sum of Rs 25,944 crore. Speaking at the annual “5-Institute Budget Seminar 2022”, the flagship budget event of Icrier, CPR, NIPFP, IDF and NCAER some of the speakers referred to this problem. Nishant Chadha, Fellow and Head-Projects at IDF said, “We are unable, consistently, year after year, to spend the money we make provisions for.” 

This problem has been flagged in successive audit reports by the Comptroller and Auditor General too. The reasons vary, but compared to the more efficient spending in sectors like renewable energy or in roads, spending seems more difficult to achieve in the social sector. An RBI paper on spending patterns by state also notes that while “globally India has the highest decentralisation of capital expenditure…inefficiency leads to a substantial waste of funds spent on public infrastructure”. 

Table: Significant Savings in 2020-21

Ministry/dept

Amount of grant/appropriation Actual expenditure Savings Agriculture & FW 1,34,544.49 1,08,600.72 25,943.77

Food and PDS

51,197.02 11,188.35 40,008.67 Health & Family Welfare  1,36,433.94 91,604.72 44,829.22 School Education 1,06,040.78 84,013.96 22,026.82 Women & Child Dev 30,507.1 19,243.56 11,263.54

All figures in Rs cr; Source: CGA Finance Accounts

Table 2: 

Total appropriation (original)	Total revised (with supplementaries)	Actual Expenditure	Savings
1,01,39,292	1,09,81,793	99,46,155	10,35,638

All figures in Rs cr; Source: CGA Finance Accounts