The number of Personal Deposit (PD) accounts in which the government keeps money meant for public use has gone up to 140 this financial year with an unspent balance of Rs 3,204 crore.
The number of these accounts has gone up from 91 in the 2018-19 fiscal, despite flags being raised repeatedly on this practice.
The government has come under fire after the Comptroller & Auditor General (CAG) found that 76 PD accounts with an unspent balance of more than Rs 4,400 crore at the end of the March 2020 fiscal were not closed in violation of the Karnataka Financial Code (KFC).
Chief Minister B S Yediyurappa has already directed the finance department, which he controls, to streamline this. There were 11 inoperative PD accounts that were closed after obtaining a report from the Treasury. “Going forward, action will be taken to identify and close many more such inoperative PD accounts,” Yediyurappa said during his reply on the Budget discussion in the Legislative Assembly this week.
According to the CM, PD accounts are mainly operated by deputy commissioners to meet expenditure on elections, Local Area Development, land acquisition and drinking water at the district-level. “The current balance of Rs 3,200 crore includes Rs 1,100 crore for legislators’ local area development funds and Rs 1,000 crore for disaster management,” Yediyurappa stated.
The government was slammed for not closing PD accounts at the end of the financial year as required by the KFC. Several MLAs raised the non-closure of PD accounts during the Budget session.
In response, Yediyurappa said the KFC itself will be amended to allow some PD accounts to remain operational. “Every year, the Finance department allows deputy commissioners to continue the accounts with the unspent balance in order to provide compensation for natural calamities, riots and other such emergency expenditure,” Yediyurappa said, adding that doing so was “inevitable.”
According to Madhusudhan B V Rao from the Centre for Budget and Policy Studies, the increasing PD accounts’ balance is an issue.
“Authorities are required to undertake periodical reconciliation of the PD accounts with the treasury accounts. Despite requests from CAG for reconciliation of PD accounts with the books of CAG and to close the accounts that have outlived their utility, the problem is still persisting,” Rao said.
Rao cited a recent CAG report that though the government undertook the task of closing 283 inoperative PD accounts, it could not be done because of non-reconciliation. “This needs to be addressed immediately,” he said.