Year-end spending, re-appropriation and the audit para in a state PWD
On 20 March, a state's Finance Department reviews the Public Works Department's road programme. Against a voted grant of Rs 840 crore for 2024-25, PWD has spent Rs 610 crore, and the Chief Engineer has submitted proposals worth Rs 190 crore to be booked in the last eleven days of the financial year: Rs 70 crore for machinery, Rs 45 crore for a single-source feasibility study consultancy, and Rs 75 crore for works not yet tendered. The Accountant General has separately flagged that Rs 95 crore booked under 'works' in 2023-24 appears to be office furniture, and that Rs 38 crore was shifted from a sanctioned bridge to road repairs by re-appropriation without legislative approval. The Chief Minister's office has asked that at least Rs 25 crore be 'utilised' before 31 March, since surrender of funds is treated as a poor performance signal. The Principal Secretary must decide on the new proposals, answer the audit para, and settle whether the unspent balance should be surrendered.
1. Advise the Principal Secretary on the Rs 190 crore proposals and the Chief Minister's office's instruction, applying the principles of annuality, legislative authorisation and the scope of re-appropriation.
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The controlling principle: a grant is a ceiling, not a spending target. PWD holds a voted grant of Rs 840 crore and has spent Rs 610 crore. It may not commit the remainder merely because cash is available; every rupee must answer to a purpose and a sanction.
Test each proposal.
- Rs 75 crore of untendered works. No administrative approval, technical sanction or tender exists. Booking this in March creates expenditure without an asset and is a textbook audit exception. Refuse.
- Rs 45 crore single-source consultancy. Single-source award without recorded justification violates procurement rules and would attract adverse comment irrespective of merit. Refuse; provide for a competitive tender and a proper detailed project report next year.
- Rs 70 crore machinery. Admissible only if within the same grant and section and already a sanctioned object of expenditure, and only by re-appropriation approved by the competent authority under the state financial rules. Re-appropriation cannot create a new service or a new object of expenditure.
The CM's instruction. 'Utilisation' is not a purpose. Spending Rs 25 crore with no liability behind it, purely to avoid surrender, is the practice the Comptroller and Auditor General treats as wasteful or fictitious expenditure. Surrender is the honest result of slow execution and is evidence about planning, not about an officer's loyalty. The proper course is to seek the instruction in writing, record the objection on file, place the matter before the Finance Minister, and explain in a speaking note why a March rush invites a para and Public Accounts Committee examination. Approve only committed liabilities supported by measurements and bills, and stop new works after mid-March.
2. The Accountant General's two observations must be answered within 30 days. Draft the substance of the reply and identify the internal control reforms the department needs.
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Observation 1 - Rs 95 crore of furniture booked under 'works'. The reply should not dispute the classification if the bills show furniture. Distinguish misclassification from misappropriation: the money was spent on public purpose, but under a head that concealed its real nature and defeated legislative scrutiny of the works grant. Propose reclassification in the appropriation accounts with an explanatory memorandum, and confirm that no re-appropriation was used to protect the works grant.
Observation 2 - Rs 38 crore shifted from a bridge by re-appropriation. Here the objection is substantive. A re-appropriation may not transfer provision from one sanctioned scheme to another so as to effectively abandon the bridge and finance an unrelated road programme; that is a change of purpose requiring the legislature's approval through a supplementary or revised grant. Accept the irregularity, state the bridge's present status, and seek ex post facto regularisation only for amounts actually spent on eligible works, with reasons.
Fix responsibility. Under the financial rules the drawing and disbursing officer certifies that expenditure is covered by sanction and is of the class contemplated. Ask the DDO to explain in writing; a reasoned finding is better than a ritual reply.
Control reforms. Monthly expenditure monitoring against object heads; a bill-tracking MIS so that no bill is parked; pre-audit for works above a threshold; finance concurrence mandatory for every re-appropriation; quarterly reconciliation with the Accountant General; and a rule that no proposal without tender or sanction reaches the sanctioning authority after 15 March.