The State Finances Audit Report for Bihar 2023–24, prepared by the Comptroller and Auditor General of India (CAG) and unveiled on 24 July, has unveiled a deeply troubling picture of financial mismanagement, exposing systemic lapses that threaten transparency and accountability. With Rs 70,877.61 crore in unverified funds and a litany of procedural failures, the report warns of a fiscal environment ripe for embezzlement and corruption, casting a shadow over the state’s governance of public resources.
At the core of the report is the staggering backlog of 49,649 Utilisation Certificates (UCs) worth Rs 70,877.61 crore, outstanding as of March 31, 2024. “Despite the requirement of submitting Utilisation Certificates (UCs) within a stipulated time period, 49,649 outstanding UCs of Rs 70,877.61 crore were not received by the Accountant General (Accounts & Entitlements), Bihar, as on 31 March 2024,” the report states. These certificates are essential to confirm that funds allocated for specific projects—such as schools, hospitals, or rural infrastructure—were spent as intended. Their absence leaves a gaping void in accountability, with no assurance that these billions served their purpose or were diverted through fraud or negligence.
“In the absence of UCs, there is no assurance that funds disbursed have been used for the intended purpose. Moreover, high pendency of UCs is fraught with the risk of embezzlement, misappropriation, and diversion of funds,” the CAG warns, highlighting the potential for systemic corruption.
Out of Rs 70,877.61 crore, Rs 14,452.38 crore pertained to the period up to 2016- 17. Top five defaulting Departments included the Panchayati Raj Department (Rs 28,154.10 crore), Education Department (Rs 12,623.67 crore), Urban Development Department (Rs 11,065.50 crore), Rural Development Department (Rs 7,800.48 crore) and Agriculture Department (Rs 2,107.63 crore).
From August 2022 to January 2024 JDU’s Vijay Kumar Chaudhary was heading the ministry.
The report further exposes a failure in tracking advances, with 22,150 Abstract Contingent (AC) bills amounting to Rs 9,205.76 crore pending Detailed Contingent (DC) bills. “Despite the requirement of submitting Detailed Contingent (DC) Bills against the advance money withdrawn through Abstract Contingent (AC) Bills, DC Bills against 22,150 AC bills of Rs 9,205.76 crore were pending for submission as on 31 March 2024,” the report notes. These AC bills represent advances drawn for immediate expenses, but without DC bills to detail their use, there is no clarity on whether these funds were spent legitimately or misappropriated.
“Non-submission of DC bills within the prescribed period breaches financial discipline and enhances the risk of misappropriation of public money,” the CAG underscores, pointing to a systemic failure that could enable corrupt practices to go unchecked.
The handling of Centrally Sponsored Schemes (CSS) reveals further cracks in Bihar’s financial oversight. The report details discrepancies in fund tracking under the Single Nodal Agency (SNA) system, with Rs 31,145.19 crore transferred for CSS in 2023–24, including Rs 18,231.24 crore as the central share per the Comprehensive Financial Management System (CFMS). However, “detailed vouchers and supporting documents of actual expenditure were not received in the office of the (A&E) from the SNA” for Rs 22,470.94 crore transferred through Grants-in-Aid bills. This lack of documentation obscures how these funds—meant for critical services like education and healthcare—were spent, creating another avenue for potential embezzlement.
Off-budget borrowings add to the fiscal opacity. The state government, through the Bihar State Road Development Corporation Limited, raised Rs 53.48 crore in 2023–24 without routing it through the Consolidated Fund. “The State Government, through a Public Sector Undertaking (Bihar State Road Development Corporation Limited), raised Rs 53.48 crore as Off-budget borrowing during 2023–24. This did not flow into the Consolidated Fund of the State but is required to be repaid and serviced through the State budget,” the report states. Such practices bypass standard budgetary scrutiny, raising concerns about financial manipulation and untracked spending.
The report also flags issues with Personal Deposit (PD) Accounts, noting that “the Government has not migrated four PD Accounts with a combined balance of Rs 1.54 crore, to Comprehensive Financial Management System (CFMS).” These accounts, operating outside the main financial system, are prone to misuse, as they lack the same level of monitoring, increasing the risk of funds being parked or diverted.
Non-compliance with Indian Government Accounting Standards (IGAS) further undermines transparency. “As against the requirements of the Indian Government Accounting Standards (IGAS), the State Government did not comply with IGAS-1: Guarantees given by the Government, IGAS-2: Accounting and classification of Grants-in-aid (GIA), and IGAS-3: Loans and Advances, made by the Government,” the report states. This includes improper accounting for guarantees worth Rs 28,040.96 crore, which obscures the state’s contingent liabilities and could facilitate opaque financial dealings.
Budgetary mismanagement is another critical concern highlighted by CAG.
The report highlights “supplementary provisions of Rs 11,042.66 crore during the year 2023–24 in 13 cases (more than Rs 100 crore in each case) under 13 different grants proved unnecessary, as the expenditure did not come up even to the level of original provisions.” Additionally, “excess expenditure of Rs 39.47 crore was incurred over Budget Provision majorly in the Road Construction Department (Rs 39.43 crore),” violating financial rules and requiring regularization. These lapses suggest either poor planning or deliberate over-budgeting, potentially creating slush funds that evade oversight.
The report also notes significant savings in CSS, with “Centrally Sponsored Schemes alone accounting for savings of Rs 31,663.68 crore, which is 48.33 percent of total savings” of Rs 65,512.05 crore in 2023–24. This indicates inflated budgeting or underutilization, raising questions about the state’s capacity to execute critical schemes effectively.
The state’s fiscal health is further strained by a public debt-to-GSDP ratio that rose from 25.47% in 2019–20 to 32.78% in 2023–24, with “public debt of the Government of Bihar having grown on average at a rate of 17.30 percent annually.” A significant portion of borrowings—between 62.82% and 75.77%—is used for repayments rather than capital creation, limiting development and raising concerns about debt management integrity.
The CAG report for 2023–24 paints a grim picture of Bihar’s financial governance, with lapses in UCs, DC bills, CSS fund tracking, off-budget borrowings, PD accounts, IGAS compliance, and budgetary controls creating a system vulnerable to corruption. These issues, left unaddressed, erode public trust and jeopardize the state’s development, as billions meant for public welfare remain unaccounted for, shrouded in a haze of fiscal indiscipline.
