Revisit budgeting methods to make estimates more realistic in Uttar Pradesh: CAG

The CAG made these observations in its report (Compliance Audit-Revenue and Civil) for the period ending March 2023. The report was tabled in the Vidhan Sabha on Wednesday

The Comptroller and Auditor General of India (CAG) has taken strong exception to the Uttar Pradesh government’s manual preparation of the state budget and asked the finance department to revisit budgeting methods to make budget estimates more realistic in the state.

The CAG said budget reappropriations were also being processed through physical files and were being entered into IFMS after approval in offline mode. (REPRESENTATIVE IMAGE)

“Develop adequate functionality for budget preparations, surrender, re-appropriation and demand for budget. Ensure budget control through Integrated Financial Management System (IFMS)...The finance department needs to revisit their budgeting methods to make the budget estimates more realistic,” the CAG observed while pointing out glaring irregularities in budget allotment, surrender and reappropriations.

The CAG made these observations in its report (Compliance Audit-Revenue and Civil) for the period ending March 2023. Tabled in the Vidhan Sabha here on Wednesday, the report pointed out that the state legislature approved a vote-on-account in 2022-23, during which budget allotment was made against specified heads. It said when the main budget was approved, no provision was made for some of these specified budget heads. It noted that as a result, expenditure of ₹219.57 crore had been incurred without budgetary provision and the same is yet to be regularised.

The CAG further noted that the functionality for surrender of budget provision had not been implemented in IFMS and, therefore, the budget surrender process is being carried out manually in offline mode outside the system.

“... the objective of real time accounting of the surrender amounts with the benefit of timely reappropriation of such surrendered amounts before the end of the financial year had not yet been realised…,” observed the CAG.

The CAG said budget reappropriations were also being processed through physical files and were being entered into IFMS after approval in offline mode. This resulted in delays in processing reappropriations in the system and non-utilisation of budget amounts. It said there were instances of re-appropriation of ₹5,120.88 crore to expenditure on new services between 2018-2024 despite contrary provisions in the budget manual. It said the schemes financed by the financial institutions and externally aided projects cannot be reappropriated to other schemes. The CAG observed that there were 151 instances of irregular reappropriations involving amounts of ₹10,186.62 crore.

The CAG has given 1885 instances involving an amount of ₹13,938.27 crore where the expenditure under various major heads of account was in excess of the allotment.

“This irregularity indicated that application controls to prevent expenditure in excess of the budget allotment had not been implemented in the IFMS. The CAG has observed that the IFMS too has several gaps that need attention.

Additional chief secretary, finance, Deepak Kumar said as the CAG made the observations in its report of 2023, the state government has taken certain steps in this regard and would make further efforts to ensure that the budgetary estimates of earning and expenditure are more realistic in future. He said the state government has already made appropriate improvements in the functioning of IFMS.