New Delhi: On July 24, the Comptroller and Auditor General tabled its report on Bihar's finances for 2023-24. The report pointed to financial irregularities, including 49,649 pending utilisation certificates of Rs 70,877.61 crore as on March 31, 2024.

A utilisation certificates denotes that a work done by a government department is completed and suitable for use.

The report states that temporary advances of Rs 184.52 crore and advances of Rs 25.46 crore were unadjusted, as on March 31, 2024. 

The Report underlined: “These unadjusted amounts from departments such as Building Construction, Public Health Engineering, Irrigation, Road Construction (National Highway), Rural Works, Minor Irrigation, Local Area Engineering Organisation, and Road Construction were required to be adjusted and deposited to the treasury concerned."

It identified the following as the top five defaulting departments: panchayati raj (Rs 28,154.10 crore), education (Rs 12,623.67 crore), urban development (Rs 11,065.50 crore), rural development (Rs 7,800.48 crore) and agriculture (Rs 2,107.63 crore). The amounts in the brackets are those they had failed to deposit to the treasury.

The CAG noted that despite the requirement of submitting Detailed Contingent (DC) bills against the advance money withdrawn through Abstract Contingent (AC) bills, DC bills against 22,130 AC bills of Rs 9,205.76 crore had not been submitted.

The CAG further noted that the state government failed to discharge its liability of Rs 144.29 crore in interest payments towards interest-bearing deposits during the financial year. It also highlighted that off-budget liabilities of Rs 53.48 crore were not disclosed in the budget documents or the annual financial statements.

Despite the requirement of submitting Utilisation Certificates (UCs) within a stipulated time-period, 49,649 outstanding UCs of Rs 70,877.61 crore were not received by the Accountant General (Accounts & Entitlements), Bihar, as on March 31, 2024. In the absence of UCs, there is no assurance that funds disbursed have been used for the intended purpose. Moreover, high pendency of UCs is fraught with the risk of embezzlement, misappropriation, and diversion of funds.  

The state surrendered only Rs 23,875.55 crore (36.4 %) of its total savings of Rs 65,512.05 crore. During the financial year 2023-24, the liabilities of the state increased by 12.34% over the previous year, it said.

The report also highlights that Bihar’s internal debt contributed to 59.26% of the total outstanding liabilities of the state. The report also detailed that net liabilities under internal debt increased by 13.51% (Rs 28,107.06 crore) over the previous year.

The state government, as on March 31, 2024, possessed outstanding liabilities (internal liability, loans and advances from the Union government and public account liabilities) of Rs 3,32,740.90 crore.

Gross fiscal deficit (Rs 35,659.88 crore) increased by Rs 10,092.05 crore against the Budget Estimates (Rs 25,567.83 crore) in 2023-24. The primary deficit (Rs 18,054.08 crore) increased over the Budget Estimates (Rs 7,213.39 crore) by Rs 10,840.69 crore during the same period. The increased deficit was financed through borrowing. As a result, the outstanding liabilities increased from Rs 2,93,307.17 crore to Rs 3,32,740.90 crore, in 2023-24.

Total liabilities of the state flagged by the report included internal liability (market loans, ways and means advances from RBI, special securities issued to National Small Savings Funds and loans from financial institutions, etc.), loans and advances from the Union government, and the public account.

The report also shared that during the year 2023-24, Bihar registered a fiscal deficit of Rs 35,659.88 crore, which was mainly financed through market borrowing and loans from the Union government.

The report says that during the last five years more than 68% of the state borrowings were spent on repayment of previous liabilities and during the current year it has increased over the previous year. “Use of borrowings for repayment of previous liabilities leaves little room for utilisation of borrowed funds for capital expenditure. Only 22.40% of the borrowed funds have been utilised for creation of productive assets and 0.58% of the borrowed funds were not utilised," it said.

The report has observed that although borrowed funds amounting to Rs 940.76 crore were available as a part of the cash balance of the state, Rs 53.48 crore has been availed as off-budget borrowing indicating poor financial management.

The CAG report has also shared recommendations for the finance department, saying that the department may review the budget preparation exercise, so that the persisting gap between Budget Estimates and Actuals is bridged. It also advises the government to devise a mechanism to ensure collection of arrears of revenue expeditiously, so that the burden of the state, due to fiscal deficit, may be mitigated. The report recommends the government put in place a mechanism to ensure that complete information related to incomplete projects is made available.

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