The Comptroller and Auditor General (CAG) of India, in its latest financial audit report for the year ended March 2025, has uncovered a series of grave accounting irregularities and systemic failures in the Union Government’s financial management.
The report, tabled in Parliament, earlier this month highlights massive misclassifications of funds and a staggering backlog of outstanding Utilization Certificates (UCs) totaling more than Rs 54,000 crore, raising serious concerns over transparency and the accuracy of the nation’s accounts.
₹54,282 Crore in Unaccounted Expenditure
The most striking revelation in the report is the failure of 15 Ministries and Departments to provide UCs for grants-in-aid already disbursed. As of March 31, 2025, 33,973 UCs involving a total of ₹54,282.32 crore were found outstanding.
While ₹38,287.52 crore of this pendency relates to the last three financial years (FY 2021-22 to FY 2023-24), the audit found that the oldest missing certificates date back to FY 1985-86.
This persistent neglect violates Rule 238 of the General Financial Rules (GFR) 2017, which mandates that UCs be submitted within 12 months of the close of the financial year to confirm that public funds were used for their intended purposes.
Major laggards identified include the Ministry of Housing and Urban Affairs (₹18,272.91 crore outstanding) and the Department of Higher Education (₹14,359.76 crore outstanding).
Accounting Chaos
The CAG report identifies widespread misclassification of funds totaling ₹12,754.47 crore. Of this, ₹8,742.56 crore was incorrectly booked as expenditure, largely due to ministries using the wrong object heads.
For instance, the Department of Atomic Energy was found to have incurred ₹3,089.97 crore in operational revenue expenses but booked them under Capital Major Heads, a move the CAG noted is strictly prohibited.
Further irregularities were noted in receipts amounting to ₹4,011.91 crore, where non-tax revenue was wrongly classified as tax revenue by the CBDT and CBIC. Such errors, the audit warns, provide a distorted view of the government’s actual fiscal health.
Transparency Hit by Omnibus ‘Minor Head 800’
The report criticizes the government’s continued reliance on the omnibus ‘Minor Head 800’ (Other Receipts/Expenditure), which is intended for miscellaneous items but has become a primary booking category.
In FY 2024-25, over 50 per cent of expenditure in three Major Heads (totaling ₹4,957.58 crore) and over 50 per cent of receipts in six Major Heads (totaling ₹4,087.43 crore) were dumped into this “other” category, severely eroding the transparency of the accounts.
Short Transfers and Adverse Balances
The audit further revealed that the government short-transferred ₹9,222 crore in collected levies and cess to four designated Reserve Funds during the year. This includes shortfalls in the Prarambhik Shiksha Kosh (PSK) for education and the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN) for health.
Additionally, the report flagged 56 cases of adverse balances in various fund heads, indicating deep-seated accounting errors or a lack of financial control. A major adverse balance of ₹44,714.77 crore was observed under the Ministry of External Affairs, which the ministry later attributed to an “incorrect transfer entry”.
Understatement of Liabilities
The CAG noted that Suspense Heads, which account for transactions that cannot be immediately classified, were being “netted,” leading to an understatement of actual balances pending clearance.
For example, the Suspense Account (Civil) was understated by 76.61 per cent. Furthermore, the government failed to reconcile a total cash balance of ₹3,880.67 crore with the Reserve Bank of India.
The auditor has recommended that the Ministry of Finance enforce stricter adherence to accounting rules and establish a robust digital module within the Public Financial Management System (PFMS) to ensure implementing agencies record and report expenditures in real-time.
Source from: https://english.mathrubhumi.com/news/money/cag-slams-modi-government-over-crores-in-unaccounted-spending-b2ppuc2k
