Just months ahead of the upcoming Assembly election in Bihar, the Comptroller and Auditor General (CAG) of India has flagged massive accounting lapses in the state’s finances.
The CAG has reported that as of March 31, 2024, as many as 49,649 Utilisation Certificates (UCs) — documents that confirm that allocated resources were utilised for the intended purpose — amounting to Rs 70,877.61 crore, had not been submitted to the Accountant General (Accounts and Entitlements) of Bihar.
The findings have come as fresh ammunition for the Opposition. Bihar Leader of Opposition Tejashwi Yadav said in a social media post, “Thanks to Modi-Nitish, a scam of Rs 70,000 crore has taken place in Bihar. The CAG has unearthed the theft. No work was seen, but the entire expenditure was made… Modi-Nitish made history by committing a Rs 70,000 crore scam. Just like the Srijan scam, now efforts to manage this from Delhi to Patna have intensified.”
According to the CAG’s State Finances Audit Report for 2023-24, the non-submission of UCs violates Rule 271(e) of the Bihar Treasury Code that requires departments to submit the documents within 18 months of the financial year in which the grant is released.
The report notes that the Bihar government “did not comply” with the national accounting standards of IGAS-1, IGAS-2, and IGAS-3.
The auditing body suspects that nearly Rs 70,878 crore of budgeted money has no audit clearance, and raised serious risk of fraud. “In the absence of UCs, there is no assurance that funds disbursed have been used for the intended purpose,” the report said, adding that this level of pendency is “fraught with the risk of embezzlement, misappropriation, and diversion of funds”.
The report’s year-wise data shows that Rs 14,452.38 crore worth of these pending UCs relate to grants issued up to 2016-17. In 2017-18, the pending UCs amounted to Rs 3,746.64 crore; to Rs 5,870.67 crore in 2018-19; Rs 17,980.24 crore in 2019-20 and 2020-21; Rs 16,014.34 crore in 2021-22; and Rs 12,813.34 in 2022–23.
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The pending UCs are heavily concentrated in a few departments, the CAG report revealed, indicating that five departments account for the majority of the unverified expenditure. The largest default is in the Panchayati Raj Department, with UCs worth Rs 28,154.10 crore pending, the report said. This is followed by the Education Department (Rs 12,623.67 crore), Urban Development and Housing Department (Rs 11,065.50 crore), Rural Development Department (Rs 7,800.48 crore), and Agriculture Department (Rs 2,107.63 crore).
In addition to department-level grants, the CAG also found that large sums of grants to local bodies remained unverified. As per the CAG, as of March 31, 2024, utilisation certificates were pending for Rs 4,277.22 crore given to Urban Local Bodies (ULBs) and Rs 2,221.83 crore given to Rural Local Bodies under various central and state schemes, including 15th Finance Commission grants.
The report also highlighted significant pendency in the submission of Detailed Contingent (DC) bills against Abstract Contingent (AC) bills. AC bills are required to draw advances by departments, and rules mandate that a department submitting an AC bill to withdraw cash must finalise the accounts by submitting a DC bill within six months. However, as on March 31, 2024, the report showed massive non-compliance, as Rs 9,205.76 crore was drawn in advance payments through 22,130 AC bills, but its expense details through DC bills were not submitted.
Of this, Rs 5,577.91 crore (60.60%) pertained to advances drawn for the “creation of Capital Assets”, including major schemes under road works, education, health, rural development, etc. The CAG further noted that 1,648 AC bills, totalling Rs 1,041.12 crore, were drawn in March 2024 alone, indicating a “rush” to exhaust budgets at the end of the financial year. The audit said that this pattern of drawing money late in the year and not reconciling it “indicates poor public expenditure management”.
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“The non-submission of DC bills within the prescribed period breaches financial discipline and enhances the risk of misappropriation of public money,” the report warned.
The CAG also pointed to issues highlighting systemic lapses in financial reporting with classification of expenditure, particularly under grants-in-aid. It observed that 59.95% of the total budgeted grants-in-aid of Rs 77,600.47 crore disbursed during 2023-24 were lumped under the category, “Others”, without clearly identifying the institutions or schemes to which the funds were released.
The CAG noted that without proper institutional codes, “the amounts outstanding against all institutions could not be worked out.” This, it said, is a gap that “affected the transparency of accounts”.
The CAG also flagged significant parking of funds under the Deposit of Local Funds. According to the CAG report, funds budgeted as grants to local bodies and municipal bodies were transferred there, but never spent. Over 2019-24, the balance in these accounts swelled to Rs 30,017.64 crore. “This amount has been shown as Revenue or Capital Expenditure in the respective years but is lying unspent in the deposit head,” the report says.
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It observes that this practice overstates actual expenditure, and further mentions that the “reason for transfer of funds for parking in Deposit of Local Fund Head of Account were awaited”.
The CAG also noted that internal audit mechanisms in departments were either weak or non-functional, and several previous audit recommendations had not been acted upon. It observed that delays in submission of audit replies and lack of timely action “defeated the very purpose of the audit”.
The CAG said that the combination of the issues of missing UCs, unreconciled advances, off-book deposits and generic accounting entries “indicate lack of internal controls in the administrative departments”.
