Gandhinagar, March 25 – The Comptroller and Auditor General of India (CAG) has identified irregularities in the financial management of the Gujarat government, including the misuse of funds, submission of misleading utilization certificates (UCs), and weak monitoring mechanisms.
These irregularities were highlighted in the "Report of the Comptroller and Auditor General of India on State Finances for the year 2024-25," which was presented to the state assembly on Wednesday, the last day of its budget session.
The audit findings, particularly concerning financial reporting practices, reveal issues with tracking public expenditure and ensuring accountability.
One of the key observations relates to the submission of incorrect utilization certificates.
The CAG cited an example involving the Sardar Patel Institute of Public Administration (SPIPA), a state-controlled entity that provides training to government employees and civil services aspirants.
The CAG noted that SPIPA had reported utilizing funds amounting to Rs 32.81 crore without actually incurring the expenditure.
The institute had deposited these funds in bank accounts and submitted utilization certificates without proper documentation, which constituted a misrepresentation of facts, according to the report.
The report also noted that SPIPA received Administrative Grants and Grants for creating Capital Assets every year to carry out its regular functions.
"The audit found that SPIPA withdrew the grant, deposited the entire amount into their bank account, and submitted utilization certificates stating that the grant was utilized for the purpose for which it was sanctioned, even though the entire amount was not actually used for the grant's intended purpose," the CAG said.
During the period 2022-25, the General Administration Department (GAD) reappropriated funds to SPIPA due to balances in Gujarat State Financial Services (GSFS) and decided to allocate the grant only after the funds were utilized from GSFS, it stated.
"This indicates that the funds remain parked in bank accounts and in GSFS, thus indicating that the expenditure has not been made for the purpose of the grant's sanction. The withdrawal of funds and parking them in accounts outside the Government Accounts cannot be classified as utilization for the purpose of submitting Utilization Certificates," the report said.
The auditor noted that such practices distort the true picture of fund utilization and undermine the credibility of financial reporting.
In another instance, the CAG found that departments reported funds as fully utilized merely upon transferring them to implementing agencies, even when the money remained unspent or was later returned.
"Funds were shown as utilized by the departments upon releasing them to implementing agencies, even though the amounts remained unspent," the report stated.
It also highlighted the widespread delay in submitting utilization certificates across departments. A total of 4,258 UCs involving Rs 7,431.84 crore were pending, with some having been outstanding 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 March 31, 2025," it said.
Since the non-submission of UCs poses a risk of misuse, the CAG emphasized that the state government should closely monitor this aspect and hold those responsible for timely submission accountable.
Warning of potential risks, the CAG said, delays in submitting utilization certificates create a risk of misappropriation, diversion, and blockage of funds.
It also pointed to cases where UCs were not submitted at all. For example, grants amounting to Rs 63 crore released to a municipal body had no corresponding UCs, raising concerns about a 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 a reduction in expenditure, leading to an overstatement of revenue.
The CAG also underlined delays in the 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 that the state enacted the Gujarat Motor Sprit Cess Act, 2001 for levying 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.
Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.