₹60,000-crore funds extended to local bodies can’t be verified: CAG

The Comptroller and Auditor General’s (CAG) report has found that the State government has failed to hold local bodies accountable for over ₹60,000 crore released as grants for development purposes.

The CAG report noted that there could have been misuse and diversion of funds as the State government was yet to receive 38,884 utilisation certificates (UCs) as of December 2017. The UCs help the accounts departments determine if the funds were used for the purpose they were sanctioned for.

The CAG report said the purpose for which these grants were sanctioned and utilised can only be confirmed on the receipt of UCs. The report said till then the expenditure in the accounts cannot be treated as final.

Not first instance

This is not the first time that the CAG has taken a grim view of the State’s accounting practices. In 2015, a report of the State Finance Commission blamed successive governments for failing to collect audited accounts for ₹70,000 crore granted for implementing 17,000 projects in villages, councils, and corporations.

Nana Patole, former BJP MP from Gondia, said, “I have time and again highlighted the possibility of misuse of funds if UCs are not accounted for. This is a sign that this government is assigning funds for other purposes while crying hoarse over purported development. Another factor for low collection of audited accounts is local bodies are working with 40% of staff.”

The State has about six lakh employees working in 259 urban local bodies and 28,291 panchayati raj institutions, which are still heavily dependent on the government for grants. Chief minister Devendra Fadnavis has promised to add another two lakh employees.

Mr. Patole said that no action has yet been taken on the letter he sent in 2015 to the then Chief Secretary alleging irregularities in grants amounting to ₹70,000 crore for which UCs were pending.

The report says the worst offender is the Urban Development Department, which did not provide UCs for ₹3,064 crore granted in 2009. The amount grew to ₹12,660 crore in 2014 and ₹28,952 crore by 2017. Others offenders include the Planning Department, which did not provide UCs for ₹5,104 crore, Tribal Development Department did not provide UCs for ₹4,000 crore, and Rural Development Department did not provide UCs for ₹2,986 crore.

The CAG report also said that the local bodies did not account for funds spent on Central schemes. The report said, “Funds meant for Centrally sponsored schemes could not be fully utilised and remain in the accounts of the implementing agencies. The amount is not readily ascertainable.”

The Central Finance Commission guidelines and Bombay Rules 1959 stipulate that officers of State departments must obtain UCs for grants released for specific development purposes.

The rules state that the officers after verification must forward the UCs to the Principal Accountants General within 12 months of the release of grants.