A grand conspiracy or a massive scam?

The Union government has withheld MNREGS and PMAY funds -two centrally sponsored schemes - because of procedural lapses, alleged corruption

The West Bengal government claims that the Union government owes it funds under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and Pradhan Mantri Awas Yojana (PMAY), two centrally sponsored schemes. The Union government has withheld funds because of procedural lapses and alleged corruption.  There were delays in the submission of utilisation certificates (UC) of Rs 229,099 crore from 2002-03 to 2020-21, according to the State Finances Audit Report for 2020-21 by the Comptroller and Auditor General (CAG).

The chief minister of West Bengal wrote to the Prime Minister on February 2, 2024, complaining that her state had submitted UCs on time to the respective central ministries in the prescribed format. Simultaneously, on the same day, she began her two-day dharna in Kolkata to protest the Union government’s alleged denial of funds under MGNREGS and PMAY. She even junked the C&AG report alleging that it presented distorted facts and was compiled by the BJP. Indeed, if there were no delays in the timely submission of the UCs in appropriate format, it points to the possibility of a grand conspiracy to punish a state government ruled by a different party. 

On the other hand, if indeed there were delays in the timely submission of the UCs in appropriate format, there is the dangerous possibility of a massive scam. Financial accountability obliges the Union government to take remedial steps to prevent any possible misuse of its funds from the public exchequer.  For example, Section 27 of MGNREGA 2005 states that the Union government may “order stoppage of release of funds to the Scheme and institute appropriate remedial measures for its proper implementation within a reasonable period of time”. 

So, there are competing claims of a grand conspiracy and a massive scam. But no matter which claim is right, the recent development is a huge tragedy. It reflects the near breakdown of good, well-established democratic practices.

Some of us have a slight unwillingness to subject ourselves to a blood test or ECG, and when we do, to share the test reports with spouses or near and dear ones. The West Bengal government in recent years has been similarly disinclined to subject itself to timely audit of its accounts. Or, when it does, to share the audit report with the state legislature and then the public. Thus, in mid-2021, after becoming a member of the West Bengal Legislative Assembly, I looked for the CAG’s reports in the public domain and was horrified to note that none was available beyond 2016-17.

The audit process should commence in the first quarter following the end of the financial year, and the legislature should get to see the reports within the next financial year. But the CAG audit report for West Bengal remains unavailable to the legislators and citizens for more than three years. Strangely, the Public Accounts Committee (PAC), which is supposed to oversee the process, also does not raise a din. The public do not know what the PAC said on the CAG report, what the action taken report (ATR) was on matters discussed by the PAC and by the legislative assembly. There seems to be a concerted effort to keep the critical audit findings away from the public gaze – at least long enough for it to become non-newsworthy. But the short-term gains from this process of burying the audit report comes with considerable long-term losses.

Take, for example, the present imbroglio. A lot of the problems could have been avoided by processing the report rigorously through the PAC and the legislative assembly. For example, the draft CAG report is normally shared with the state government for comments. The report for the year ended March 2021 contains the age-wise arrears in submission of UCs. At the draft stage, the state government officials could have pointed out that there were no pending UCs as the chief minister claims. Furthermore, the PAC and the Assembly could have emphasised the ‘error’ that the chief minister has now pointed out to the Prime Minister.  CAG could have been asked to insert a paragraph or more explaining why the number of outstanding UCs increased rapidly almost three-and-a-half times from 17,485 in 2016-17 to 61,196 in 2020-21. Similarly, Abstract Contingent (AC) bills, which are meant for drawal of fund with a view to incurring expenditure on items that are contingent in nature, are required to be adjusted through Detailed Contingent (DC) bills within one month from the date of completion of the purpose for which the advance is drawn. 

The report has been available for almost two years. Fund disbursal under MGNREGS was stopped from December 2021. Yet, it is surprising that the West Bengal government has woken up only now when it is facing a fiscal crisis. The West Bengal chief minister’s harsh words about a report produced by the CAG, a constitutional figure, are unfortunate. So is her attempt to absolve her government of any wrongdoing by pointing out some rumours about problems with the Union government’s affairs in Delhi.

When governments pursuing irresponsible policies face a fiscal crisis, they have a strange similarity in reaction. First, there is outright denial. Then, there is creative accounting and the build-up of payment arrears.  And, finally, there is the attribution of the problem to some other conspiring evil entity such as an enemy country or external development such as the increasing price of hydrocarbon or war in some part of the world.

With a fiscal crisis, Chief Minister Mamata Banerjee has conformed to the pattern. First, she denied any problem, said everything is ok and that she would fulfil her lofty promises in dozens of welfare schemes with her own resources. Then, she started paying suppliers and workers late, spending less on items than their budgeted amounts, and building up payment arrears. And finally, she has put the blame squarely not on some enemy country but on the Union government for denying what is due to her government. Never mind the pattern, the allegations are serious. Time for CAG to set up a task force to examine the veracity of Mamata Banerjee’s complaint and find out whether she was misled by her bureaucrats?

The author is Bharatiya Janata Party member of the West Bengal Legislative Assembly and a former chief economic advisor in the Union finance ministry