AP violated norms in fiscal management: CAG

Vijayawada: The YS Jagan Mohan Reddy government in the state violated the Constitution of India and bypassed the Legislature in spending public money to the tune of Rs 1.10 lakh crore, the Comptroller and Auditor General (CAG) has observed.

In its report on the state's finance accounts for the year ended March 2021, the CAG exposed the gross financial impropriety and mismanagement of the Jagan Mohan Reddy government, wherein thousands of crores of rupees were spent without authorisation.

The Comprehensive Financial Management System (CFMS) has also come in for rebuke by the statutory auditor.

The report in two volumes was presented to the Legislature here on Friday.

"There was an excess disbursement of Rs 1,10,509.12 crore over the authorisation made by the State Legislature during the financial year 2020-21. This is in violation of Articles 204 and 205 of the Constitution, under which "no money shall be withdrawn from the Consolidated Fund except under appropriation made by Law by the State Legislature," CAG Girish Chandra Murmu noted.

This vitiated the system of budgetary and financial control and encouraged financial indiscipline in management of public resources, Murmu observed.

The state government, according to the CAG report, transacted a sum of Rs 48,284 crore through "special bills."

On being questioned by the principal accountant general, the special chief secretary (finance) "ratified the backend transactions" overstepping his powers.

"The procedure for carrying out these adjustment transactions is laid down in the treasury code. Ratifying the backend transactions is not within the powers of the special chief secretary (finance)," the CAG pointed out.

Following audit objections, the state government issued an order on October 12, 2021, entrusting the activities managed by the Centre for Financial Systems and Services to director of treasury and accounts and others.

"This only confirms the contention of Audit that the operation of special bills was unauthorised," the CAG said.

The CAG also found that transactions under five categories amounting to Rs 26,839 crore were "not in consonance with the Treasury Code."

"In my view, these material accounting entries were effected through the back-end of the CFMS without any valid rationale and necessary documentation, bypassing the treasury system and were in violation of the Treasury Code and the IT controls," Murmu remarked.

He warned that the irregular accounting entries were fraught with the risk of inflating the government expenditure besides (leading to) possible misappropriation as these were done in backend of the CFMS.

Referring to the off-budget borrowings, the CAG said the AP government did not make any disclosure in the state Budget despite mobilising Rs 38,312.70 crore through seven public sector undertakings in 2020-21.

"The Fifteenth Finance Commission recommended that, in the interest of transparency, states need to make full disclosure of off-budget borrowings. This was, however, not disclosed in the state Budget," the CAG added.

At the end of March 2021, the state's off-budget borrowing touched Rs 86,259.82 crore while the total outstanding guarantees extended by the government amounted to Rs 1,16,330 crore.