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CAG rues huge central funds to local bodies

A Comptroller and Auditor-General of India report has expressed dismay over the rising share of funds disbursed by various ministries to local bodies and NGOs in 2010-11.

, ET Bureau|
Last Updated: Apr 25, 2012, 01.18 AM IST
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NEW DELHI: A Comptroller and Auditor-General of India report has expressed dismay over the rising share of funds disbursed by various ministries to local bodies and NGOs in 2010-11. The CAG report on the accounts of the Union government was tabled in Parliament on Tuesday.

"An analysis of plan expenditure revealed that 77% of the total plan expenditure was in the form of grants-in-aid payment,'' the report stated. "In five of the ten ministries and departments incurring the largest plan expenditure, over 99% was in the form of disbursement of grants-in-aid.'' These included rural development, secondary education and literacy, women and child development, drinking water supply and higher education.

According to an official, the report should send alarm bells ring in the Planning Commission, which is responsible for finalising plan allocations for various ministries. Instead of making investments directly, the ministries were distributing funds through agencies, NGOs, local bodies and authorities, upon the submission of utilisation certificates, which may not meet rigours of accountability.

The CAG report noted that, over the years, the proportion of direct transfer of the central plan assistance to total plan expenditure had increased steadily from 26.71% in 2007-08 to 32.24% in 2010-11. On the other hand, transfers through the state governments had diminished over the corresponding period.

"For the year 2010-11, the Union government transferred central plan assistance of Rs 1,22,199 crore (as per revised estimates) directly to the state and district-level autonomous bodies and authorities, societies, NGOs, etc., for implementation of the centrally sponsored schemes outside the state government budget,'' it said. "The share of direct transfers in grants-in-aid has increased from 50% to 58% in the last four years,'' the CAG report pointed out, adding, "a major concern repeatedly brought out by CAG is that accounts of funds utilised by the implementing agencies are not readily available and there is need to ascertain whether there are unspent funds lying with these agencies.''

The audit watchdog took the specific case of the department of rural development to drive home its point. The total plan expenditure incurred by the department was Rs 72,061 crore, the largest by any government department. "In this case, where over 99% of the plan expenditure was in the form of grants-in-aid, the lack of expenditure on capacity-building and technical support programmes together with deficiencies in internal audit ranging from 97% to 100% during the years 2008-09 to 2010-11, along with the presence of substantial pending utilisation certificates highlighted the risks that needed to be addressed by the department,'' the report mentioned.

The CAG report also found the civil ministries taking recourse to the practice of lumping of expenditure towards the end of the financial year, violating instructions issued by the finance ministry in September, 2007 to restrict expenditure in March and the last quarter of the financial year to 15% and 33%, respectively, of the budgeted estimates. The audit watchdog, for the first time, undertook a time analysis of the expenditures incurred by the civil ministries to draw its conclusions.

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