CAG exposes Gujarat govt’s extremely poor financial management, report tabled in Assembly

The Comptroller and Auditor General (CAG) report presented in the Gujarat Assembly on Wednesday observed that the state government’s financial mismanagement has led to budgetary control going out of hand. The report highlighted the lack of maintaining budgetary expenditure accounts, and the poor quality of accounts presented by the Gujarat government for 2023–24. The CAG drew attention to several weaknesses in Gujarat’s compliance with financial discipline.

The state’s revenue increased by 11.71% to ₹2,22,763 crore, while its total expenditure stood at ₹2,47,632 crore. This shows that the government spent much more than what it earned.

Expenditure exceeds income

The report noted that Gujarat failed to meet the revenue surplus targets for 2020–21, which were mandatory under the Gujarat Fiscal Responsibility Act. The budget projected a surplus of ₹7,479.64 crore, but the actual figures showed a deficit of ₹7,483.28 crore—meaning the government understated the real deficit.

Similarly, the government contributed less than required to the Consolidated Sinking Fund—a reserve fund meant to ensure repayment of market borrowings and prevent future financial crises.

The report also flagged that labour cess collected from builders for workers’ welfare was not properly utilised, and interest liabilities on loans were not correctly accounted for.

Poor budget planning and regulation

The CAG said Gujarat’s budget planning was inadequate and expenditure regulation weak. Supplementary provisions worth ₹2,414.11 crore through seven grants proved unnecessary. Moreover, ₹11,344.01 crore was shifted from one head to another without real need.

Out of 151 grants, 50% of funds remained unused. Around 13.51% of the budget—₹45,154.58 crore—remained unspent, highlighting the gap between estimates and reality. Additionally, ₹353.71 crore of unutilised funds were not returned, while ₹193.67 crore was spent in excess without Assembly approval.

Flaws in accounting practices

The report exposed significant loopholes in Gujarat’s accounting system. Funds worth ₹21,845.38 crore received from the Centre were directly transferred to implementing agencies, bypassing the state budget. Personal Ledger Accounts showed an unspent balance of ₹1,951.56 crore. Similarly, grants worth ₹11,869.17 crore across 24 accounts remained unutilised.

Returns on capital investment were far below expectations. While Gujarat paid 6.75% interest on loans, its investments fetched only 0.56%. Loss-making companies received investments, while ₹833.30 crore remained idle in dormant loan accounts.

Balance dropped below zero during Covid

During 2019–20, amid the pandemic, Gujarat’s balance went into the negative, showing a fiscal deficit of 19.51%, which rose further to 21.57% in 2020–21. This indicated a sharp rise in debt burden. The state also failed to pay interest of ₹264.12 crore on certain deposits—loans taken for revenue expenditure. The report warned that such practices damage long-term economic health.

Excess and misclassified expenditure

In some grants, expenditure exceeded sanctioned limits. The government misclassified capital expenditure as revenue expenditure—apparently to exhaust funds before year-end. Even land acquisition costs were wrongly classified.

Poor performance in women & child development

The report found weak implementation in women and child development programmes. The government had announced the construction of 2,350 Anganwadis but built only 210. A grant of ₹21 crore lying idle with Gujarat Women Economic Development Corporation was also not returned.

₹16,402 crore stuck in 204 incomplete projects

Capital expenditure funds also remained blocked. As many as 204 projects, each costing more than ₹10 crore, were left incomplete—locking up ₹16,402.67 crore. The audit also found delays in accounts of autonomous bodies and state-funded institutions. Additionally, 183 cases of fund misappropriation were reported, while ₹176.87 crore worth of cases remained unresolved.