CAG report flags release of funds using executive orders

A Comptroller & Auditor-General (CAG) report has found that the government released Rs 12,740 crore over a three-year period from the Consolidated Fund without prior authorisation from the legislature.

The state finance audit report tabled in the legislature on Wednesday raised concerns that “incurring expenditure first without the authority of legislature” continued despite recommendations against such practices.

The report also flagged 32 cases of unspent provisions, each exceeding Rs 100 crore and aggregating to a total of Rs 22,211.65 crore. The maximum amount of unspent provisions was in the Education Department.

Executive orders

The report noted that executive orders were issued by the government for the release of the additional amount, which was neither sanctioned in the budget nor in supplementary estimates.

In 2020-21, Rs 5,281.7 crore was released through 36 executive orders from 10 grants. In 2019-20, Rs 3,518 crore was released through 78 orders from 19 grants and Rs 3,940.35 crore was released through 77 orders from 19 grants in 2018-19. Executive orders are generally issued to draw resources from the Consolidated Fund only for ‘emergent/unforeseen’ expenditures.

Though the amount was regularised through supplementary demands “it was observed that the expenditure incurred out of these additionalities included mainly expenditure on routine items.... which did not qualify as emergent/unforeseen expenditure,” the report noted.

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Drawing the amount through executive order and later obtaining the authority of the Legislature is not good practice, the audit said.

Unspent provisions

In the case of unspent provisions, departments such as Finance, Home, Transport, Rural Development and Panchayat Raj, Social Welfare, Urban Development etc, each had unspent provisions exceeding Rs 1,000 crore.

According to rules laid down by the state government, all savings anticipated should be reported to the Finance Department “immediately after they are foreseen. However, it was observed that the reasons were either not appropriately explained nor furnished by the departments.”

In case of 18 grants, parent departments failed to surrender the entire unspent provision worth Rs 5,168 crore, while there was partial surrender in 37 cases.

The report highlighted that 89% of the unspent provisions - equal to Rs 3,961.94 crore - was surrendered on the last two days of the fiscal “indicating inadequate financial control.”

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