CAG: Transfer of Central funds to Gujarat agencies up by 350% since 2015

The quantum of funds transferred directly by the Central government rose by over 350 per cent to Rs 11,659 crore in 2019-20 from Rs 2,542 crore in 2015-16, the CAG pointed out.

The quantum of funds directly transferred from the Centre to various implementing agencies in Gujarat, including private trusts, academic institutions and individuals, that did not reflect in the state’s annual finance accounts, has increased 350 per cent since 2015, noted the Comptroller and Auditor General of India (CAG).

In the State Finances Audit Report tabled in the Gujarat Assembly on Tuesday, the CAG noted, “With effect from April 1, 2014, Government of India decided to release all assistance for centrally sponsored schemes and additional central assistance to the state governments. In Gujarat, however, transfer of central funds directly to state implementing agencies continued even during 2019-20.”

The quantum of funds transferred directly by the Central government rose by over 350 per cent to Rs 11,659 crore in 2019-20 from Rs 2,542 crore in 2015-16, the CAG pointed out.

The report also noted how sizeable funds were also given directly by the Government of India to private sector companies (Rs 837 crore), private academic institutions (Rs 17 crore), trusts (Rs 79 crore), registered societies NGOs (Rs 18.35 crore) and individuals (Rs 1.56 crore) during 2019-20.

“The Central government has been transferring funds directly to state implementing agencies… for various schemes and programmes in social and economic sectors. As these funds were not routed through the state budget/ state treasury system, the annual finance accounts did not capture flow of such funds. Thus, to that extent, the state’s receipts and expenditure as well as other fiscal variables and parameters derived from them, did not present the complete picture,” the CAG observed.

Some of the schemes where major transfers of central funds took place directly during 2019-20 include Rs 3,133 crore transfered as part of Pradhan Mantri Kisan Samman Nidhi, where farmers are given minimum income support of Rs 6,000 per year, and Rs 1,667 crore given to Metro-link Express for Gandhinagar and Ahmedabad, now known as the Gujarat Metro Rail Corporation, which is a 50:50 joint venture of the state and Central governments that is implementing metro projects in Ahmedabad and Surat.

Funds to the tune of Rs 593 crore was transfered directly for Mahatma Gandhi National Rural Employment Guarantee Scheme that guarantees 100 days’ employment to rural households in a year, Rs 182 crore for Member of Parliament Local Area Development Scheme and Rs 97 crore for Pradhan Mantri Matru Vandana Yojana, a maternity benefit programme.

Among the implementing agencies in Gujarat that received the the bulk of the funds directly from the Centre during 2019-20, included state government institutions (Rs 3,406 crore), state government PSUs (Rs 3,389 crore), central government institutions (Rs 1,826 crore) and government and autonomous registered societies (Rs 1,069 crore).

On such direct fund transfers by GoI, Professor Y K Alagh, noted economist and professor emeritus at Ahmedabad-based Sardar Patel Institute of Economic and Social Research, said, “The Centre does have the right to implement a Central project in a state. However, there are grey areas with regard to commercial projects such as a metro where there are arguments both in favour and against. The direct benefit transfers is a more serious issue where money is allocated to individuals based on certain criteria and the most deserving end up being deprived for not necessarily having all those criteria.”

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