Karnataka government departments failed to surrender ₹4,850.94 crore of unspent funds in 2021-22: CAG

This revelation raised concerns over effective financial management within the government and prompted questions about the reasons behind the underutilisation of allocated resources.

The CAG presented the state finance audit report for the financial year that concluded in March 2022 before the state legislature on 11 July.

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Unspent grants not surrendered

According to the CAG report for the fiscal year 2021-22, the government departments failed to surrender ₹4,850.94 crore out of the total unspent grants amounting to ₹10,849 crore to the Finance Department.

As per Rule 264 of the Karnataka Budget Manual, Controlling Officers are required to promptly inform the Finance Department about any expected savings and provide detailed reasons for such projections.

However, the report noted that the departments did not adequately explain or furnish the reasons for the unspent funds.

Among various departments, only ₹5,998 crore, which accounted for 55 percent of the unspent funds, was actually surrendered.

In the case of six grants, totalling Rs 1,539.29 crore, the entire unspent amount was not returned.

Notably, the Department of Rural Development and Panchayat Raj (DRPR) did not surrender the significant sum of ₹1,208.92 crore, while the Department of Water Resources did not return ₹127.20 crore.

Moreover, 28 grants experienced partial surrenders. Out of the unspent provision of ₹8,979.80 crores, ₹5,668.18 crores were surrendered, leaving Rs 3,311.62 crores not returned to the finance department.

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The unreturned funds

The CAG report highlighted specific departments with significant unreturned amounts.

For instance, the Department of Revenue and the DRPR did not surrender ₹831.25 crore and ₹827.10 crore, respectively.

The Home and Transport Departments failed to return ₹549.38 crore and ₹163.01 crore, respectively.

Furthermore, the Education Department did not surrender ₹363.63 crore, and the Department for Urban Development did not return ₹163.01 crore.

Additionally, several other departments — the Agriculture and Horticulture Department; the Animal Husbandry Department; the Department of Personnel and Administrative Reforms; the Department of Forest, Ecology, and Environment; the Social Welfare Department; the Food and Civil Supplies Department; Housing; the Public Works Department; the Water Resources Department; the Health and Family Welfare Department; the Energy Department; and the Kannada and Culture Department — also did not surrender their unspent amounts at the end of the fiscal year 2021-22.

Automatic returns?

The DRPR’s Internal Finance Advisor Priyanka Neeshna told South First: “Ever since the Karnataka Khajane II (treasury) — the online financial management platform for the government — came into existence, the unspent funds automatically go back to consolidated funds or the Finance Department.”

She explained: “In a few cases, if the action plan for projects has been submitted and either work has been not taken up or no payment was made for the work done in the same fiscal year, the amount sanctioned for the project gets lapsed.”

Neeshna added: “It thus becomes an additional liability for the next fiscal year. The unspent amount is returned to the K2.”