Lapses in Gujarat’s finances flagged

The Comptroller and Auditor General of India (CAG) has highlighted anomalies in the state govt's financial management, flagging improper utilization of funds, submission of misleading utilization certificates (UCs), and loopholes in monitoring mechanisms. The ‘Report of the Comptroller and Auditor General of India on State Finances for the year 2024-25' was tabled in the state assembly on Wednesday.

Citing instances of submission of incorrect UCs, the CAG report noted that the Sardar Patel Institute of Public Administration (SPIPA) had shown funds amounting to Rs 32.81 crore as utilized without actual expenditure. SPIPA had instead parked the funds in bank accounts, and submitted UCs without the actual utilization, which amounted to falsification of facts, the report states. The CAG found that departments reported funds as fully utilized merely upon transferring them to implementing agencies, even when the money remained unspent or was later returned.

It also highlighted large-scale pendency of UCs across departments. "Audit scrutiny revealed that 4,258 UCs aggregating Rs 7,431.84 crore, given to 18 departments of the state from 2001-02 to 2023-24, had not been submitted as of 31 March, 2025," the report adds.

The CAG also noted in the report that public funds were parked outside govt accounts in violation of prescribed norms. An amount of Rs 445.19 crore was retained in bank accounts instead of being routed through a public account.

With respect to the transfer of cess to local bodies, the auditor observed the state enacted the Gujarat Motor Spirit Cess Act, 2001 for levy of cess on turnover of sales of motor spirit in the state. This was to be transferred to a Local Authority Fund in the public account to compensate local authorities for the abolition of octroi.

"However, the govt did not create any such fund. During the year 2024-25, the govt collected Rs 4,169.3 crore as cess on turnover of sales of motor spirit (petrol). The amount has not been transferred to any such fund," the CAG report notes. Gujarat's GSDP registering growth of 10.2%against FY 2023-24, the report notes, adding that the state's GSDP constituted 8.1%of India's GDP.

The report said Gujarat's fiscal health is anchored by robust GSDP growth and an adequate revenue surplus.

"Given the decrease in the revenue surplus in FY 2024-25, further contraction will necessitate an increased reliance on market borrowings to finance capital expenditure. This generates potential risks to long-term debt sustainability," the report says.