State's spending poor in FY09, says CAG report

The Comptroller and Auditor General of India (CAG) report on state finances for the year 2008-09 has found that an overall provision of Rs 13,660.83 crore remained unspent by various departments of Karnataka government during the fiscal. However, this was off-set by an excess expenditure of Rs 65.85 crore over provision during the year.

According to the report tabled in the state legislative assembly on Thursday, large unspent provisions were in areas such as urban development, water resources, debt servicing, public works, finance, agriculture and horticulture. There were also instances of inadequate provision of funds and unnecessary/excessive re-appropriations. Besides, there was a rush of expenditure at the end of the year.

In many cases, the anticipated unspent provisions were either not surrendered or surrendered on the last two days of the year leaving no scope for utilising these funds for other development purposes, the CAG said.

The government’s compliance with various financial rules and regulations, procedures and directives was unsatisfactory as evident from the delay in furnishing utilisation certificates for grants given to various institutions.

The CAG report stated that the government provided grants-in-aid to various bodies and institutions without ensuring that expenditure was incurred for the intended purpose. Delays noticed in submission of pro forma accounts by departmentally managed commercial undertakings. There were instances of losses and misappropriations, the CAG said.

The Centre had transferred Rs 2,437 crore during 2008-09 directly to the state implementing agencies of Central plan schemes.

However, “there is no single agency monitoring its use and there is no readily available data on the amounts spent in any particular year on major flagships and the important programmes,” it said.

Noting the government’s investments, CAG said state invested Rs 10,820 crore in government companies/statutory corporations under perennial loss during 2004-09. The return on investment during the period was negligible.

It said the share of expenditure on general services (considered non-development in nature) in total expenditure decreased from 33 per cent in 2004-05 to 24 per cent in 2008-09 while that of social services went up from 27 per cent to 35 per cent during the same period.

The share of economic services decreased from 35 per cent in 2004-05 to 34 per cent in 2008-09, the CAG said.

Surplus cash balance, mainly due to market borrowings of Rs 7,417 crore raised during the last quarter of 2008-09 was invested in 14-day treasury bills at an interest rate of 5 per cent per annum on an average as against interest paid at an average rate of 7 per cent per annum on market borrowings resulting in net interest burden of Rs 41.85 crore up to the end of June 2009.

“The state government should resort to borrowings based on necessary and affordability rather than availability,” the CAG report said.