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LATEST NEWS UPDATES | CAG slams govt on capital spending, rural job schemes

CAG slams govt on capital spending, rural job schemes

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published Published on Aug 19, 2013   modified Modified on Aug 19, 2013
-The Financial Express


Amid the government's efforts to curb fiscal deficit, the Comptroller and Auditor General (CAG) on Tuesday criticised the Centre for cutting down on capital spending, over-stating spending on centrally sponsored schemes and doling out some subsidies without obtaining Parliament approval.

UPA's flagship scheme Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) also came under the scanner with the CAG questioning whether the entire amount booked for the job scheme should be classified as "grants for creation of capital assets" when a large number of works did not result in capital formation or minor improvement in existing assets.

During 2011-12, CAG pointed out that Centre's capital expenditure was 2.01% of the GDP, well below the 3.1% level set out for the year in the fiscal consolidation plan of the 13th Finance Commission. "Of the total capital expenditure, 38% was accounted for by defence," it said.

An analysis of spending pattern of civil ministries revealed that 76% of the total Plan expenditure was in form of grants-in-aid payment.

"In three of the 10 ministries or departments incurring the largest Plan expenditure, over 99% was in the form of disbursement of grants-in-aid," CAG said.

Charging ministries with incorrectly classifying revenue expenditure as capital expenditure and vice versa, CAG said the government understated capital expenditure by R1,708.91 crore and over-stated revenue deficit by an equal amount during FY12.

Conversely, while the Centre transferred Plan assistance of R1,09,173 crore directly to state/district-level autonomous bodies and authorities, societies, non-governmental organisations, etc., for implementation of Centrally Sponsored Schemes, the aggregate amount of unspent balances in their accounts maintained outside government accounts was unascertainable.

"The government expenditure as reflected in the accounts was, therefore, overstated to that extent," it said.

While the ministry of rural development booked an expenditure of Rs 29,189.77 crore under the head of "grants for creation of capital assets for operationalisation of MGNREGA, CAG said a large number of works did not result in creation of assets and the focus was on employment generation or minor improvements to existing assets. "...There is a strong case for not classifying the entire amount under ‘Grants for creation of Capital Assets' in this flagship scheme," it said.


The Financial Express, 14 August, 2013, http://www.financialexpress.com/news/cag-slams-govt-on-capital-spending-rural-job-schemes/1155002/0


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