CAG report shows how badly Andhra manages its finances

It some cases money spent without budgetary provision; in certain others funds meant for welfare development saved unnecessarily

By M Suchitra
Published: Tuesday 26 March 2013

A Comptroller and Auditor General of India (CAG) report on State Finances,  tabled in the Andhra Pradesh  Legislative Assembly on Tuesday, reveals several lacunae in the budgetary process of the state government. These include errors in budgeting, lumpsum provisions being made without clarity of purpose, excess expenditure, over-allocation and expenditure without budget provisions. “Financial rules were flouted by several departments by drawing funds in excess of requirement, resorting to re-appropriations without proper explanations and spending without provisions of fund,” notes the report. On the other hand, the government “saved” Rs 500 crore and over 20 per cent of budgetary provisions in certain grants for development programmes.

“Saving of about one-sixth of  the budgetary allocation and non-utilisation of funds allocated for various developmental programmes raises serious questions about the budget formulation exercise. While this could show a healthy picture as far as fiscal indicators are concerned, it has had an adverse impact on implementation of various policy initiatives taken up by the government,” observes the audit.

For instance, the government allocated Rs 1,112 crore for providing mid day meals to poor children but spent only Rs 673 crore (61 per cent) on the scheme during the year. Similarly, Rs 100 crore was allocated as state’s share for the National Rural Drinking Water Programme (NRDWP) but no amount was released for this scheme. In October 2010, the Central government introduced Indira Gandhi Matrutwa Sahayog Yojna, a scheme in which cash incentives were to be directly provided to lactating women. This scheme was taken up in Nalgonda and West Godavari districts in Andhra Pradesh. The state utilised only Rs 1.26 crore crore out of the Rs 10.32 crore provided. The state government allocated Rs 100 crore for Assistance to Panchayati Raj Bodies for Rural Sanitation but only Rs 28 crore was spent. These are just a few of the examples listed by the audit report.

Several departments were not compliant with rules and regulations, especially those relating to submission of accounts and utilisation of funds for implementation of various socio-economic developmental schemes. “Operation of over 100,000 personal deposit (PD) accounts and locking up of about Rs 23,483 crore in these accounts affected the transparency of the government accounts,” comments the CAG.

Incomplete projects
Blocking of funds because of incomplete projects impinge negatively on the quality of expenditure, notes the report. As per the audit,  228 projects which were to be completed by 31 March 2012, were not completed. The total amount spent on these projects together was Rs 49,516 crore. In the previous financial year (2010-11) Rs 4,46,330 crore was spent on these projects. Out of the 228 projects, the original cost of 54 projects was revised by the government to Rs 87,559 crore. “Non-completion of these projects within the stipulated period not only resulted in increase in cost but also deprived the state of the intended benefits for prolonged periods, notes the report ( see table).

Incomplete projects

Department No. incomplete project   Original cost (crore)  Revised cost (crore)
Irrigation 72 57,670 86,312
Road and Bridge 42 645 751
Panchayati Raj & Rural Devlopment 99 252 296
Rural Water Supply & Snitation   15 1387 --
Total    228 59,954 87,559

The  projects remain incomplete due to delay in land acquisition, finalising the designs  and drawings, approvals, and calling tenders. “Due to non-adherence to fixed time lines in many cases, funds allocated for many capital works remained unspent during the year,” notes the report.


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