“I personally believe that CAG reports must not be used for political gains….” Narendra Modi 21st September 2014
The reason for Narendra Modi’s above statement is the following gist of CAG Report, which came out within weeks of his comments on CAG:-
- The Comptroller and Auditor General of India (CAG) , in its report has come down heavily on the then Narendra Modi led Gujarat government for Financial Mismanagement of resources and benefiting selected corporates in the state.
- It has slammed the Gujarat government in its 5 different audit reports for severe mismanagement of state’s financial resources amounting to Rs 25000 Crore
- The CAG criticized the government for poor financial management and budgetary control. It observed that in two instances the grants totaling Rs 13,049.67 crore remained unused which pointed to lack of ability of government departments to spend grants. The CAG noted, “Budgetary control should be strengthened to avoid deficiencies in financial management.” The CAG also observed oversight of funds transferred directly from transferred directly from Union government to state implementing agencies. It says during 2012-13, Rs 4,819.64 crore was transferred from the Government of India but not passed through the state treasury system.
- The CAG also observed that the state government raised develop ment loans in excess of development expenditure worth Rs 2,482 crore, thereby defeating the purpose of taking loans.
- The apex auditor also slammed the Gujarat govern ment over quality of expenditure. It observed, “The government has invested Rs 47,171 crore in statutory corporations, government companies etc., but the average rate of return is mere 0.24% in the last five years. Still the state is borrowing and pumping money into it.”
- The CAG has questioned the Gujarat government’s claim of Rs 5,570 crore revenue surplus during 2012-13 and described it as overstated.
- The CAG report states: “The Gujarat government wrongly booked expenditure of Rs.881 crore on account of grant-in-aid and expenditure of Rs.202.27 crore on subsidy resulting in overstatement of revenue surplus to the tune of Rs.1088.57 crore”. The report says that cheques worth Rs.2,667 crore were not encashed at all as on March 31, 2013 that led to overstatement of expenditure.
- The auditing watchdog points out that the State’s fiscal liability (or debt burden) which was around Rs.50,000 crore during the BJP- ruled Keshubhai Patel regime rose astronomically after the Narendra Modi government took charge. “It rose to Rs.1.05 lakh crore in 2008- 2009 and is Rs.1.66 lakh crore in 2012- 13,” according to the CAG
- Gujarat Maritime Board and Gujarat Urja Vikas Nigam gave undue benefits to Reliance Petroleum worth Rs.649.29 crore & Essar Power of Rs.587.50 crore.
- CAG also stated in the report that out of the 69 working PSUs, 42 earned profits of Rs4,468 crore and19 incurred losses worth Rs426.9 crore. GSPC (Rs1,247 crore), GMDC (Rs924 crore) and GHSPC(Rs825.7 crore) were the major contributors to the profit. The major loss makers included GSRTC(Rs141.99 crore), Gujarat State Financial Corporation (Rs113 crore) and Alcock Ashdown (Rs76.4crore).
- According to CAG, investment in 81 PSUs was Rs97,472 crore as on March 31, 2013,nearly doublefrom Rs50,793 crore in 2007-08. The thrust of PSU investments was mainly in the power sector.
- The state PSUs received support in the form of equity, loans and grants/subsidies to the tune of Rs15,340 crore in 2012-13, the highest ever and over 50% higher than the previous year.
- The auditor also said that working PSUs had registered a turnover of Rs91,309 crore in 2012-13, which was 13.09% of the state GDP. However, PSUs’ share in the state GDP has declined in recent years.
Audit report of the CAG revealed that the department of Narmada, water resources, water supply and Kalpsar could not complete some work despite committing expenditure asit had failed to acquire land. In certain cases, the tender procedure was notfollowed and for certain works, tenders were issued without the approval of draft tender papers.
- Of the 95 works with an estimated cost of Rs1,789 crore audited, tender documents and procedures were followed for 73 works, costing Rs1,614 crore.
- No tender can be issued without the approval of draft tender papers. However, tenders for 21 works were issued before such approval.
- Three contracts with an estimated cost of Rs36.80 crore were awarded without submission of pre-qualification documents by bidders.
- Four divisions did not safeguard government interest for a full security deposit against the cost of work.
- Two contracts were awarded without floating tenders.
- Two contracts were awarded for construction at unworkable rates.
- Five works for construction of either dam or canal to provide irrigation facilities to 20 villages remained incomplete despite spending Rs73.83 crore on the projects.
- Seven other works of building channels, link canal and underground pipeline have remained incomplete following an expenditure of Rs23.69 crore.
- Delay of 7 to 14 years for irrigation projects has resulted in an unnecessary expenditure of Rs41.89 crore.
- Department could not complete canal works worth Rs20.22 crore due to the failure to acquire land.
- Government could not lay underground pipeline network after spending Rs7.87 crore and delay of eight years because of the failure to acquire land.
- Deficiencies in financial management in two financial years -1999-2000 and 2011-12 -grants totalling `13,049.67 crore remained unused, which points to the inability of various government departments to spend grants. “Budgetary control should be strengthened to avoid deficiencies in financial management.” the CAG noted.
- Staff shortage in engg colleges E ngineering colleges are facing acute staff scarcity. In 16 government engineering colleges, 90% of professors’ posts, 81% of principals’, and 23% of assistant professors’ are vacant. In 26 government polytechnics, 85% posts of principals, 74% of HODs, and 69% of laboratory assistants are vacant. Grants for machinery and equipment have not been adequately utilized.
- Girls’ education scheme bungled The Vidyalaxmi scheme that provides financial assistance of `2,000 to girls enrolling in class 1 and class 8 is riddled with irregularities. There are multiple instances of purchase of bonds for a single beneficiary, and eligible beneficiaries were deprived.
- Loopholes in jail security The system for maintaining work records in the office of the inspector general of prisons and the Gujarat State Police Housing Corporation Limited (GSPHCL) is inadequate. The GSHPCL truncated the scope of the construction of yard walls meant for hardcore criminals at the Sabarmati Central Prison without the consent of prison authorities. Lapses in security led to the excavation of a tunnel at the jail.
- Heritage: Monumental apathy No monument was identified for state protection after 2007.Deficiencies were found in the manner of preservation of monuments. Survey work, excavation and research were negligible. No long-term planning for preservation and conservation.
- Undue benefits to corporates Gujarat Maritime Board applied incorrect full wharfage rate under the Captive Jetty Agreement with Reliance Petroleum Ltd which resulted in the short recovery of `649.29 crore. The Gujarat Urja Vikas Nigam Ltd, by not fixing delivery points after the finalization of the power purchase agreement, passed undue benefit of `587.50 crore to Essar Power Gujarat Limited. The CAG also said that the non-monitoring of the construction quay in phase 1 of Adani Group-owned Mundra port led to the short recovery of `118.12 crore.
- Professionalism crunch in state PSUs Of the 69 PSUs, 19 incurred a loss of `426.94 crore. Heavy losses were incurred by the Gujarat State Road Transport Corporation (`141.99 crore), Gujarat State Financial Corporation (`113.17 crore) and Alcock Ashdown (Gujarat) (`76.48 crore). There is a need for greater professionalism and accountability in the functioning of PSUs, the CAG said.
- Poor tax recovery ROver the past five years, the CAG had pointed to cases of short levy, c non-realization, U underassessment and e suppression of turnover by taxpayers to the commercial tax department.
- Renewable energy burden The state burdened electricity consumers with `473.20 crore. The state-owned Gujarat Urja Vikas Nigam Limited entered into contracts for purchasing excess power under the solar policy which resulted in . the increased burden.
- The country’s audit watchdog, the Comptroller and Auditor General of India (CAG), has flayed the Gujarat government for discontinuing the “Antyodaya Anna Yojana” (AAY) that supplied fortified wheat flour for overcoming micro-nutrient deficiencies in a state that has a poor malnutrition record, especially among children.
- In April 2006, the state government had introduced distribution of fortified wheat flour in place of wheat under the AAY in Ahmedabad city on an experimental basis to overcome micro-nutrient deficiencies, which was expanded to the rest of the state in April 2010, CAG pointed out in a recent report on the state’s ‘General and Social Sector’ tabled in the Assembly.
- “Though the use of fortified wheat flour was cost-effective and increased intake of micro-nutrients, the state government discontinued the project on May 2012 after incurring a total expenditure of Rs 210 crore,” the report stated, pointing out how the state government had failed to fully utilise the Additional Central Assistance of Rs 27 crore provided by the Government of India on March 2010 and had refunded Rs 5.04 crore in December 2012.
- The state government attributed non-availability of flour mills, milling capacity, testing facility to ensure the actual mixed quantity of soya, iron, folic and other micro-nutrients as the reasons for discontinuing with the programme. The state also pointed out complaints from people regarding insects in fortified flour, etc.
- However, CAG has dismissed the reasons cited by the Gujarat government. “The reply was not acceptable as instead of making efforts to overcome the hindrances on implementation of the scheme, the state government opted to shut it down. Further as per a case study, substitution of fortified wheat flour had increased intake of micro-nutrients, reduced 94 per cent of inadequate iron intake among PDS (Public Distribution System) beneficiaries and according to WHO criteria, this programme was highly cost effective,” stated the auditor in its remarks.
- CAG also found “improper implementation” of the Annam Brahmam Yojana that was launched by the state government in January 2009 in pursuance to a Supreme Court order (of Octber 2002) that put the onus of prevention of starvation and malnutrition deaths on the states.Under this programme, the state government was meant to provide 10-15 kg of food grains, free of cost, to people who had no ration card and belonged to a specific target category (very poor, handicapped, orphan, bed-ridden at hospitals, street children, etc).
- In its report, CAG observed that as against the targeted distribution of 2,250 quintals per annum of food grains, only 241 quintals (11%) were distributed in 2009-10, 487 quintals (22%) in 2010-11 and 480 quintals (21%) in 2011-12. “Food grains under the scheme were not distributed in 19 districts in 2009-10, 13 districts in 2010-11 and 18 districts in 2011-12 and five districts in 2012-13. This indicated that the Mamalatdars/DSOs failed to identify maximum beneficiaries, defeating the very purpose of the scheme,” the report added.
- The auditor was particularly harsh on the state government for its slackness towards the Village Grain Bank (VGB) scheme that was introduced in November 2006 to offer safeguard against starvation during the period of natural calamities or during lean agriculture season. GoI sanctioned 354 VGBs (2006-08) and released a one-time cash component of Rs 43 lakh and 1,416 metric tonne of food grains.”However, of the 61 VGBs sanctioned in 2006-07 for Porbandar and Banaskantha districts, only 24 were in existence at the end of March 2013. Thus, 37 VGBs ceased to exist and no action was initiated by the state government to revive them. Hence, the objective of setting up these VGBs was defeated,” CAG observed, adding that the state government had not formed 12 VGBs for Dahod and Panchmahal districts. State has over 8 lakh malnourished kids.
- There are over 8 lakh malnourished children in Gujarat, the Assembly was informed. According to figures tabled in the State Legislature Assembly on Friday, there are over 8.44 lakh children, who are underweight as per ICDS (Integrated Child Development Services), as on December 31, 2013. Of these, 62,500 children are severely underweight, informed the state government in a written reply to an unstarred question by Congress MLA Tejashree Patel.
- Strangely, Vadodara had the highest number of children — over 65,800 — who are underweight as per the ICDS norms for malnourishment. The district also has an additional 5,900 children who are severely underweight.
- The tribal district of Dahod, along with the state’s most urbanised district of Ahmedabad, has the second and third highest number of underweight children, respectively. While Dahod has 56,600 underweight and 3,500 severely underweight children, Ahmedabad has 55,500 underweight and 5,700 severely underweight children, the state government figures revealed. Similarly, the districts of Banaskantha has 55,400 malnourished children, Sabarkantha has 53,300 and Panchmahal 55000.
- The reply also talks about state government schemes like Mission Bal Sukham that is being run to address the grave issue. The government has also been providing “Nutri-candy”, fruits (twice a week), to children between the age group of 3-6 years in anganwadis. Children in tribal areas are also given milk twice a week, the reply added.
- The state suffered a loss of about Rs 1,540 crore in the last financial year, according to the comptroller and auditor general’s reports that was tabled in Gujarat assembly.
The report says revenue department officials could not recover premium in a proper way in 21 land plots in prime location in the state. This resulted in a loss of Rs 33.84 crore in revenue.
Gujarat government allotted three land plots measuring 14,700 square metres to Gujarat Energy Transmission Corp. All plots were gauchar land (pasture). The government did not collect Rs 19.11 lakh from the corporation.
STAMP DUTY LOSS The revenue department’s stamp duty branch lost Rs 41.89 crore because of incorrect assessment of land use. At least 20 stamp duty officers were involved in this wrong assessment of the property document registration. The government also lost 1 per cent of total price of property for registration fees.
The CAG also found out in the audit of 34 government offices that many officers did not calculate market price of the property on the basis of jantri. The report mentioned 225 properties in prime location in which the price was not calculated properly. The government lost Rs 8.15 crore due to this.
VAT INCOME LOSS The report pointed out that officers did not take due action against 17 industrial units and because of this the treasury lost Rs 271.22 crore.
The officers did not issue notice under land revenue act to these units. Lack of proper coordination among various departments led to a loss of Rs 129.07 crore in VAT in 2013-14. All 17 companies benefitted because of poor inter-department coordination. Meanwhile sales tax department seized properties of 50 persons between 2004 and 2013 to recover taxes. Because of this the government lost Rs 1,055.65 crore.
On the last day of the budget session on Friday, the opposition Congress MLAs were suspended for their protests over the last-day tabling of the CAG reports in the house and sky-rocketing prices of vegetables and food items in state.
Shankersinh Vaghela, Leader of Opposition (LOP) said: “We tried to raise issues like the intentional tabling of CAG reports on the last day and not allowing debate on it, the sky-rocketing prices of vegetables, increasing heinous crimes etc., but the government did not allow it so we had to protest in the house. Our members brought vegetables to the house to draw the attention of this dumb and deaf government”.