For the second year in a row, the Comptroller and Auditor General (CAG) has refused to take responsibility for the Union finance accounts as it has stated in its latest audit findings that government expenditure during 2008-09 is overstated and lacks transparency.

The CAG’s certification for the Union accounts is a must before the government tables it in Parliament. In the finance accounts for 2008-09, that was tabled on Friday, the apex auditor gave a conditional certificate to the government stating that Centre transferred over Rs 83,000 crore directly to state and district level autonomous bodies and NGOs for implementation of various flagship schemes and it was not known how much of this money remained unspent.

“The aggregate amount of unspent balances in their accounts (autonomous bodies, NGOs) maintained outside government accounts is unascertainable. The government expenditure as reflected in the accounts to that extent is overstated,” CAG noted.

Indicating a significant degree of opaqueness in these accounts, the report says more than Rs 28,000 crore under as many as 29 major government expenditure heads had been classified as “Other Expenditure”.

“This constitutes more than 50% of the total expenditure recorded under respective Major Heads indicating opaqueness in these accounts,” the report noted.

It also raised objection to the manner in which the government showed expenditure of Rs 5,785 crore on interest paid on income tax refunds during 2008-09. This was accounted for as reduction in the revenue of the government in the finance accounts.

“Such accounting adjustment is not only against the accounting rules but also results in incurring of expenditure on the interest payments without obtaining Parliament’s approval,” the report observed. It said as a result, the expenditure as well as revenue of the Union government was understated by Rs 5,785 crore.

Commenting on deficits, the report said both revenue and fiscal deficits have increased from Rs 85,000 crore and Rs 1.65 lakh crore in 2007-08 to Rs 3.56 lakh crore and Rs 4.34 lakh crore in 2008-09. While the increase in revenue deficit was 317%, the fiscal deficit went up by 163% compared to the previous year.

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  1. TNTNayar says:

    A.Banerjee’s comments bring out how political overlords got the constitutional audit functions skewed in order to serve their political agenda.It is,however, encouraging to see some sign of fresh air flowing into the audit system at last.One can only hope this fearless objectivity is sustained and nurtured.

  2. A.Banerjee says:

    My personal experience while handling the finance division of an economic ministry in the late eighties has been too disgusting and bitter. This was so especially with the accounts of some of the PSU giants whose shares are prime buys in the stock exchange. Year after year, the accounts were fudged to show bogus profits for purposes of political propaganda for the ruling party. Rampant corruption apart, the standard of the PSUs’ commercial audits carried out by the CAG were also ludicrous-merely a routine job and invariably missing out key areas.
    Thus, it is quite a pleasant culture shock to me, two decades after I was impelled to return to my parent Service, to learn about this change in the mindset of the CAG, an essentially secretive and monolithic organisation.

    It is indeed nice to feel that the CAG’s IA&AS officers seem to have undergone a change of mindset and hopefully matured too, shedding their protected and pampered prudishness and a long nurtured sense of insecurity due to their inadequacy in the nuances of accounting principles and realities. I would like to hope that I am correct in my assessment and this attitude and courage of conviction, coupled with an openness of mind, become a part of the culture of the IA&AS.

  3. Tira. T says:

    At last the cat is out of the bag and the CAG has gathered sufficient courage to come out with the truth about the true state of Govt. accounts.

  4. Nisban says:

    Yes, KS is right. Most of the accounts of the PSUs, Autonomous Bodies, Semi-Govt. organisations, and the various NGOs/institutions in receipt of huge govt. funding are totally fudged year after year. It is leaned that, in the cases of such a few NGOs in Delhi, including one which is the India chapter of a foreign NGO claiming to fight against corruption worldwide, the accounts have been found to be unreliable with a “qualified” audit report! In fact, there are mounting allegations of corruption against the top office bearers of this anti-graft NGO itself! The so-called audit reports of those mentioned above actually happen to be just token of compliance with the Companies Act or the General Financial Rules of the Govt., and the picture in the states is unthinkably worse and grave. There are tens of State PSUs, whose accounts are also required to be audited under section 625B of the Companies Act, who do NOT file their annual accounts for decades before the RoC, and submit (if at all) their income tax returns ‘on estimate’ ONLY because their accounts are NOT even audited for years! So, the general public must be made aware of the hard and unpalatable fact that, only because the Govt. accounts are made public by the Govt. and so much hyped, these are not that sacrosanct and really not at all reliable. This is the ground reality of our govt. accounts and statistics.

    And this also reflects the true state of transparency in the governance of the country. Thanks to a belated realisation of the CAG, this home truth is now public knowledge.

  5. KS says:

    It is not only Satyam in our country. From the objections of CAG it seems that Central Govt. is also maintaining accounts in that line.

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