Gujarat Finances: CAG Flags Irregularities & Misuse

Gandhinagar, Mar 25 (PTI) The Comptroller and Auditor General of India (CAG) has flagged irregularities in the Gujarat government's financial management, including incorrect utilisation of funds, submission of misleading utilisation certificates (UCs), and weak monitoring mechanisms.

It pointed out these irregularities in the "Report of the Comptroller and Auditor General of India on State Finances for the year 2024-25", which was tabled in the state assembly on Wednesday, the last day of its budget session of the legislature.

The audit findings, particularly in sections dealing with financial reporting practices, highlight issues in tracking public expenditure and ensuring accountability.

One of the most striking observations relates to the submission of incorrect utilisation certificates.

The CAG cited a case involving the Sardar Patel Institute of Public Administration (SPIPA), a state-controlled entity which provides training to government employees and civil services aspirants.

The CAG noted that SPIPA had shown funds amounting to Rs 32.81 crore as utilised without the actual expenditure.

The institute had parked the funds in bank accounts and submitted utilisation certificates without the actual utilisation, which amounted to falsification of facts, the report said.

The report noted that SPIPA received Administrative Grant and Grants for creation of Capital Assets, every year for carrying out its regular functions.

"The audit observed that the SPIPA withdrew the grant, deposited the whole amount into their bank account, and submitted utilisation certificates that the Grants have been utilised for the purpose for which it was sanctioned, even though the entire amount has not been utilised for the purposes of the grant," the CAG said.

During the period 2022-25, the General Administration Department (GAD) has reappropriated provisions to SPIPA due to balances in Gujarat State Financial Services (GSFS) and decided to allocate the grant only after utilisation of the funds parked in GSFS, it said.

"This indicates that balances remain parked in the bank account and in GSFS, thereby indicating that the expenditure has not been made for the purpose of sanction of the grant. The withdrawal of funds and parking in accounts outside the Government Accounts cannot be classified as utilisation for the purpose of submission of Utilization Certificates," the report said.

The auditor noted that such practices distort the true picture of fund utilisation and undermine the credibility of financial reporting.

In another instance, the CAG found that departments reported funds as fully utilised merely upon transferring them to implementing agencies, even when the money remained unspent or was later returned.

"Funds were shown as utilised by the departments on release to implementing agencies, even though the amounts remained unspent," the report said.

It also highlighted large-scale pendency of utilisation certificates across departments. A total of 4,258 UCs involving Rs 7,431.84 crore were pending, some for several years.


"Audit scrutiny revealed that 4,258 UCs aggregating Rs 7,431.84 crore, given to 18 departments of the state from 2001-02 to 2023-24, had not been submitted as of 31 March 2025," it said.

Since non-submission of UCs is fraught with the risk of misutilisation, it is imperative that the state government should monitor this aspect closely and hold the persons concerned accountable for submission of UCs in a timely manner, said the CAG.

Warning of potential risks, the CAG said, delay in submission of utilisation certificates poses risk of misappropriation, diversion and blocking of funds.

It also pointed to cases where UCs were not submitted at all. For instance, grants amounting to Rs 63 crore released to a municipal body had no corresponding UCs, raising concerns over lack of oversight.

The CAG flagged the parking of public funds outside government accounts in violation of prescribed norms.

An amount of Rs 445.19 crore was retained in bank accounts instead of being routed through a Public Account.

Retention of government money outside the Public Account violates provisions of Article 266(2) of the Constitution, the report noted.

The auditor also raised concerns over unadjusted advances drawn through Abstract Contingent (AC) bills. As many as 5,378 AC bills amounting to Rs 554.73 crore remained unadjusted.

Non-adjustment of AC bills renders the expenditure opaque and susceptible to misuse, the CAG said.

Further, the report flagged incorrect accounting practices that distorted the state's fiscal position.

In one case, Rs 1,108.42 crore was wrongly booked as revenue receipts instead of being treated as reduction in expenditure, leading to overstatement of revenue.

The CAG also underlined delays in submission of accounts by autonomous bodies and institutions receiving government grants, noting that such delays hinder legislative scrutiny and weaken financial discipline.

With respect to the transfer of cess to local bodies, the audit observed the state enacted the Gujarat Motor Sprit Cess Act, 2001 for levy of cess on turnover of sales of motor spirit in the state.

This was to be transferred to a Local Authority Fund in the Public Account to compensate local authorities for the abolition of octroi.

"However, the government did not create any such Fund. During the year 2024-25, the government collected Rs 4,169.29 crore as cess on turnover of sales of Motor Spirit (petrol). The amount has not been transferred to any such Fund," the CAG noted.